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Bill spurring New Mexico hydrogen production stalls in committee

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Bill spurring New Mexico hydrogen production stalls in committee

Jan 28, 2022 | 8:07 am ET
By Patrick Lohmann
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Bill spurring New Mexico hydrogen production stalls in committee
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A hydrogen pumping station for hydrogen-powered cars in Berlin, Germany in 2020. (Photo by Sean Gallup / Getty Images)

A House committee on Thursday tabled a bill aimed at making New Mexico a hub of hydrogen production, adding a major hurdle for one of Gov. Michelle Lujan Grisham’s signature policy proposals this legislative session.

The 6-4 vote to table the bill included two Democrats and came after six hours of debate in the House Energy, Environment and Natural Resources committee. During that period, three cabinet secretaries and the bill’s sponsors testified about the perceived merits of the Hydrogen Hub Development Act

The committee’s chair, Rep. Matthew McQueen (D-Galisteo) was one of the two Democrats who voted to table the bill. He did not respond to a request for comment Thursday on the measure’s prospects now. Legislation being tabled in committee during a 30-day session like this one often means it is never resurrected. 

The bill contains various measures to encourage hydrogen production here, including at least $125 million in taxpayer-funded loans and grants, plus at least $25 million in tax credits before fiscal year 2026, according to an analysis by the Legislative Finance Committee. (The LFC report said the tax credit cost is “difficult to determine but likely significant.”) 

Sponsors said the bill would spur the creation of high-quality jobs in economically distressed parts of the state, while helping the state toward an environmentally sustainable future. 

The bill would allow for the creation of so-called “hydrogen hubs” here, geographical areas that are designated for hydrogen production based on natural resources and industry commitments. 

One possible hub is in the area around Prewitt, New Mexico, the site of the Escalante Power Plant, a coal-fired plant that closed in 2020 and took more than 100 jobs with it. The plant would employ more than 110 people if it were converted into a hydrogen production facility, a plan detailed by industry and state officials at a recent news conference and site tour

NM leaders promote hydrogen production despite questionable environmental benefits

Hydrogen is emerging as a possible component of a strategy to wean humans off their addiction to fossil fuels. After hydrogen is produced, it emits only water vapor and warm air as byproducts when used as a fuel source. The United States Department of Energy cites its “promise for growth in both the stationary and transportation energy sectors.” 

The recently passed federal infrastructure bill also includes $8 billion toward the creation of four regional hubs of hydrogen production. The potential to get one of those hubs here is what made passing the hub act so urgent this session, sponsors said. 

But the inputs used for creating the hydrogen here have environmentalists concerned. The state legislation would incentivize the creation of so-called “blue hydrogen,” which is derived from natural gas and coal. Carbon dioxide, a byproduct of the production, would need to be sequestered, according to the measure. 

Opponents of the bill questioned why there weren’t more tax or other incentives to produce “green hydrogen,” which can be produced via electricity generated by solar and wind power.

The debate Thursday drew about 300 attendees in a virtual waiting room, most of them in opposition. The bill’s supporters included lobbyists for oil giants like Exxon and Chevron, plus elected officials in McKinley County and Cibola County, which were affected by the Escalante plant closure.

“We believe that hydrogen can play a role in a lower carbon future as a transportation fuel, industrial feedstock and as an energy storage medium,” said Patrick Killen, a lobbyist for Chevron, in support of the bill. “We believe the use of ‘blue’ and ‘green’ hydrogen as a fuel source can help reduce greenhouse gas emissions, helping to address climate change, while continuing to deliver energy to support society.”

Opponents included state and regional environmental groups, which blasted the proposed bill as a giveaway to oil and gas companies and a “false solution” to the problem of carbon-emitting fuel production. Native American residents of northwestern New Mexico, a region with high natural gas reserves, also spoke, saying they had not been consulted about the implications of hydrogen production in their area.

New Mexico’s draft plan for hydrogen a non-starter for environmentalists

“Hydrogen development, as well as any other extractive energy activity, is the proverbial candle burning at both ends,” said Duane “Chili” Yazzie, president of the Shiprock Chapter of the Navajo Nation. “At one end is the methane flare representing your coveted revenue and economic development. And at the other end of the candle is the inflaming of the life of the planet. One day when the two flames meet, there will be darkness.”

Committee members asked numerous technical questions about provisions contained in the bill, including whether they would be efficient enough in helping the state tackle climate change and whether hydrogen was really a safe bet. Rep. Pamelya Herndon (D-Albuquerque) ultimately voted for the measure, but she questioned whether enough outreach had been done. She wondered if the legislation might better be handled during a special session after the 30-day session is completed.

The other Democrat who voted to table the bill is Rep. Miguel Garcia, of Albuquerque. He joined McQueen, plus Republicans Larry Scott of Hobbs, James Strickler of Farmington, Rod Montoya of Farmington, and James Townsend of Artesia.