New Mexico tech, energy companies seek funding infusions as lawmakers rethink R&D tax credits

SANTA FE — As the 30-day session draws to a close this Thursday, New Mexico lawmakers are looking to pass a batch of new tax incentives to position the state at the vanguard of groundbreaking technologies that have already placed big bets on the Land of Enchantment.

House Bill 27 and its companion bill, Senate Bill 97, would strengthen, modernize and expand the state's R&D tax credit, lending New Mexico a competitive edge in the race to develop emerging industries like fusion energy and quantum computing, which are poised to generate billions of dollars in revenue and thousands of jobs in coming years.

Meanwhile, House Bill 154, which passed the House floor 59-5 last week and now heads to the Senate, would add an additional tax credit for advanced energy equipment. The bill outlines several industries, new and old, that the Land of Enchantment is looking to support into the future — from oil and gas to clean energy, from mining to advanced manufacturing.

"When we look at legislation, there are a couple of bills that will facilitate and make it easier for some of these advanced energy companies to set up shop here in New Mexico and grow and expand," said Rep. Meredith Dixon, D-Bernalillo, the primary sponsor of HB 154, which decouples the state's definition of "advanced energy" from the federal 45X Advanced Manufacturing Production Credit.

Alongside the supercomputing promise of quantum, which has received significant buzz and investment from New Mexico over the past year, California-based company Pacific Fusion is laying the groundwork to generate a hyper-efficient source of renewable energy and selected Albuquerque as the new home of its billion-dollar research and manufacturing campus last fall.

Having competed with the California cities of Livermore and Alameda, New Mexico's path to winning Pacific Fusion's investment aligns with lawmakers' current efforts to revamp the state's industrial development structure before the 30-day session draws to a close.

The Albuquerque City Council approved $776.6 million in industrial revenue bonds to support the venture in September. Pacific Fusion is one of the companies now looking to the state to make good on ongoing commitments to help seed what some scientists hail as the "holy grail of renewable energy."

"For this first billion-dollar project, we're spending hundreds of millions of dollars on components that are being made by people around the country at facilities where we have embedded engineers," said Carrie von Muench, COO and co-founder of Pacific Fusion, which has partnered with Sandia National Labaratory in its endeavor to develop the new industry. "And it massively increases our ability to be effective if we can work in an environment where the state has incentives to help bring some of that work to New Mexico, right?"

Senate Bill 177, one of the state's major general fund transfer bills this year, contains a broad allocation of roughly $300 million for "advanced energy" companies, including Pacific Fusion, as quantum computing operations are set to receive more than $600 million.

New Mexico last fall partnered with Roadrunner Venture Studios to deploy $25 million to develop the state as a center for quantum technology, which leverages the laws of quantum mechanics to complete computations many times faster than conventional computers — a concept, like commercialized fusion energy, that was still the stuff of science fiction until only recently.

Rob Black, Cabinet secretary of the New Mexico Economic Development Department, said these industries could be gamechangers for the state, creating long-term financial growth and job creation for New Mexico well into the future.

"New Mexico is at an inflection point," he said. "It's a really critical time where we're getting some significant wins in a way that we haven't done before, and leadership positions in advanced energy, fusion in particular, and advanced computing, like quantum, that are the technologies of the future."

The state's two federal research labs in Los Alamos and Sandia have both long been dedicated to developing advanced technologies, with quantum computing programs that helped advance research in the field.

"We've been really good over time at creating the space where the R&D and that science gets done, but we've never been the place where the commercialization and deployment happens," Black added.

HB 27's provision for "stackable" tax credits with industrial revenue bonds, also known as IRBs, would help companies from outside the state make long-term commitments to New Mexico by building physical infrastructure here.

"We've trying to be smart about how we do our incentives, so that we make sure that the commercialization and those positive financial impacts happen here in New Mexico," he said.

John Miller is the Albuquerque Journal’s northern New Mexico correspondent. He can be reached at jmiller@abqjournal.com.