OPINION: Endangered tax credits are essential for New Mexico’s clean energy future

New Mexico is a leader in America’s clean energy transition not only because of our state’s aggressive climate policies, diverse natural resources, and highly skilled energy workforce — but also because our state leads in innovative clean energy technologies like direct air capture, carbon sequestration and hydrogen.

Unfortunately, changes being considered by Congress right now could dramatically stifle ongoing and future innovation in New Mexico.

During the Biden administration, the Inflation Reduction Act (IRA) established the 45V tax credit to incentivize low-carbon hydrogen production, adding a key pillar to the nation’s decarbonization strategy. The recently finalized rules for 45V provide clarity for business and investors and ensure that investments align with strict environmental standards.

However, due to shifting political winds the fate of the 45V hydrogen production tax credit now hangs in the balance.

Tax credits have long played an essential role in catalyzing the development of next-generation technology, specifically in the energy sector. And they are a particularly important tool for a state like New Mexico, as we work to shift toward more diverse revenue streams.

Losing this incentive would create a devastating ripple effect — setting back critical technological innovation and ultimately, reducing our ability to stave off the worst impacts of climate change.

New Mexico’s abundant renewable resources, coupled with our existing natural gas infrastructure, make it a prime location for hydrogen development. Hydrogen is exceptionally versatile and can be used for transportation, manufacturing, power generation and heavy industry, reducing emissions across nearly all sectors.

Natural gas and hydrogen can be combined for use in high-intensity industries like steel, cement and glass, as well as producing renewable components such as solar panels, wind turbines and transmission lines. This approach reduces emissions and supports deep decarbonization, while meeting the substantial energy demands of industry and infrastructure.

Hydrogen development presents an especially important opportunity for our rural communities. A robust clean hydrogen industry could create up to 700,000 jobs nationwide by 2030 and 3.4 million by 2050. This means long-term, good-paying jobs in regions historically dependent on fossil fuel industries.

Not only is the 45V tax credit good for New Mexico, but it also strengthens U.S. energy security by reducing reliance on imported fossil fuels. As global energy markets fluctuate, a stable domestic hydrogen industry will provide a buffer against supply chain disruptions, trade wars and geopolitical instability.

Other nations are already rapidly investing in hydrogen technology, and by incentivizing domestic production, the U.S. can maintain leadership in this emerging market. This will drive innovation, attract investment and foster international partnerships in clean energy.

The 45V tax credit would ensure the country remains competitive in the global clean energy race and help cement New Mexico’s position as a leader in our energy transition. I urge Congress to protect the hydrogen production tax credit to keep this momentum going. Our economy, and our future, depend on it.