Gov. Michelle Lujan Grisham’s administration has doubled down on efforts to build a hydrogen economy in New Mexico, foreshadowing another bruising battle with environmental groups and clean energy advocates in the coming months.
Cabinet secretaries from the state Economic Development, Environment, and Energy, Minerals and Natural Resources departments told the Legislative Finance Committee last week that, under an executive order the governor signed in March, those agencies are coordinating a statewide strategy to jumpstart the local hydrogen industry in cooperation with three other states.
New Mexico signed a memorandum of understanding in February with Colorado, Utah and Wyoming to jointly pursue a slice of $8 billion in federal funding that the U.S. Department of Energy will award over the next year to build at least four — and possibly up to eight — “hydrogen hubs” in different regions or states across the U.S. That’s part of the $1.2 trillion bipartisan infrastructure law that Congress approved last fall as part of national efforts to build a non-carbon economy, paving the way for states and regions to seek competitive grants of up to $1 billion or more for hydrogen-hub development.
The first proposals for DOE awards are due this fall, and New Mexico is now working aggressively to identify the local assets and potential projects it can contribute to the four-state effort to build a “Western Inter-States Hydrogen Hub,” cabinet officials told the LFC at the start of its monthly meeting Wednesday, which the committee held on-site at the coal-fired Escalante Generating Station near Grants.
Private investors are working to turn Escalante into a hydrogen production and generating facility, potentially making the plant — located in the small town of Prewitt — into the nation’s first successful coal-to-hydrogen conversion project.
LFC members toured the plant during the meeting, and heard presentations from the project investors. Then, cabinet officials — joined by New Mexico State University Chancellor Dan Arvizu — provided an update on the government’s hydrogen-related efforts.
The governor’s March executive order made building a hydrogen economy an integral part of all economic development strategies going forward, accelerating government efforts in cooperation with local research universities and the state’s two national labs, said Environment Department Secretary James Kenney.
“A lot of people are working in many directions now,” Kenney told the LFC. “We’re inventorying all our (hydrogen-related) assets in all four states, including infrastructure, natural resources, market supply and demand, and distribution potential. All that is going on now.”
Economic Development Secretary Alicia J. Keyes said the benefits of building a robust hydrogen industry in New Mexico constitute a “once-in-a-lifetime” opportunity.
“We‘ve had numerous conversations with companies under non-disclosure agreements” regarding hydrogen projects, Keyes told the LFC. “It’s an amazing opportunity for New Mexico to lead on this.”
The LFC meeting, however, encouraged protest demonstrations in Prewitt and Grants by environmental and grassroots indigenous organizations, who say hydrogen is not a “clean” source of energy, but a fossil fuel-based product that will actually worsen greenhouse gas emissions while prolonging — and likely increasing — natural gas production in New Mexico and elsewhere.
That’s because today’s production technology relies almost entirely on pulling hydrogen molecules out of natural gas, emitting substantial carbon dioxide in the process. And to contain those emissions, Escalante and other project developers expect to rely on carbon capture and sequestration, a technology that has yet to be proven commercially effective and economical.
Apart from emissions caused by the carbon production process itself, additional methane emissions could come from increased drilling, processing and transporting of natural gas to hydrogen hubs, making the full, carbon-emitting life cycle of hydrogen worse than just directly burning natural gas, said Tom Solomon of the environmental group 350 New Mexico at the LFC meeting, which included limited public comment.
“Hydrogen produced from fracking methane will worsen emissions and the climate crisis,” Solomon told the LFC. “We need to develop a sustainable economy with renewable resources. (Gas-based) hydrogen must not be on that list, because it’s not sustainable.”
Intense opposition from environmental groups and many legislators in this year’s legislative session blocked approval of bills that would have established a legal framework with tax breaks and other government incentives to promote hydrogen production across New Mexico.
Now, with the consequences of climate change directly impacting New Mexico and the West through wildfires and drought, the government should focus squarely on renewables like solar and wind, especially given the clear opposition to hydrogen demonstrated in this year’s session, said Jonathon Juarez-Alonzo, policy lead for Youth United for Climate Crisis Action.
“Our state is on fire and the fire season has barely started,” Juarez-Alonzo told the LFC. “The climate crisis is here … and New Mexicans showed up by the thousands in the past legislative session to resoundingly reject the hydrogen bills. It’s time to stop wasting everyone’s time on these false solutions.”
Energy transition, economic benefits
Cabinet officials, however, told the LFC that gas-based hydrogen production can be a low-carbon, clean-burning fuel that could provide a needed bridge in the transition to a non-carbon economy, helping to transform hard-to-decarbonize sectors like long-haul trucking, aviation and heavy industrial manufacturing operations.
Indeed, executives from Tallgrass Energy — one of two companies working to convert Escalante to a hydrogen facility — told the LFC that operators will contain at least 97% of all emissions from the plant once converted to hydrogen. And, they said, within 10-15 years, the plant could be converted into a fully non-carbon facility as technology development continues to lower the costs for transitioning to electrolysis production, whereby hydrogen molecules are pulled from water rather than natural gas, with no carbon emitted in the process.
State agencies are also working on standards and monitoring mechanisms to control methane emissions throughout the hydrogen life cycle, from the point of gas production, processing and transportation through the hydrogen conversion process itself, according to cabinet officials at the LFC. Those developing policies will be a critical part of any forthcoming Western Inter-States application for DOE funding.
Perhaps most important, building a hydrogen economy will generate significant economic development and good-paying jobs as the economy shifts away from fossil fuels, especially in rural areas impacted by the shutdown of coal plants like Escalante, which closed in 2020.
Local officials cited that as a principal reason to support the state’s hydrogen efforts in comments to the LFC.
That’s particularly true in McKinley County, where the closure of Escalante and nearby coal mines threw at least 150 people out of work, said McKinley County Commission Chair Billy Moore.
“This is an opportunity for the citizens of McKinley County to continue to grow,” Moore told the LFC. “We’re very much in favor of working with Tallgrass or whoever else wants to develop the hydrogen industry here.”
Executives from Continental Divide Electric Cooperative and El Paso Electric also said utilities need clean electrific generation from hydrogen to maintain grid reliability as backup power for intermittent solar and wind facilities.
The debate will likely grow in intensity in coming months, as the four western states develop their joint proposal to the DOE, and as state officials identify new policies to promote hydrogen, which will need legislative approval. Under the governor’s executive order, cabinet agencies are required to provide recommendations to the governor no later than one week before the 2023 legislative session.
The governor, who made hydrogen legislation a priority in this year’s session, will likely fight an uphill battle to gain support, not just from environmental groups and clean energy advocates, but from legislators themselves, many of whom are still uncertain about the advantages and disadvantages. During the LFC meeting, Sen. George Munoz — a Gallup Democrat and committee vice chair — said opposition activists have “valid complaints” about the legacy of pollution in their communities from the fossil fuel industry.
“They bear the burden and brunt of it, and that’s hard to swallow as a legislator,” Munoz said. “… We need to take a hard look at hydrogen. I don’t know where I stand yet.”
Kevin Robinson-Avila covers technology, energy, venture capital and utilities for the Journal. He can be reached at email@example.com.