HOUSE ENERGY, ENVIRONMENT AND NATURAL RESOURCES

COMMITTEE SUBSTITUTE FOR

HOUSE BILL 6

55th legislature - STATE OF NEW MEXICO - second session, 2022

 

 

 

 

 

 

 

AN ACT

RELATING TO CLIMATE; ENACTING THE CLEAN FUTURE ACT; ESTABLISHING GREENHOUSE GAS EMISSIONS LIMITS; REQUIRING REPORTING; PROVIDING POWERS AND DUTIES; ENACTING A NEW SECTION OF THE AIR QUALITY CONTROL ACT; DIRECTING THE ENVIRONMENTAL IMPROVEMENT BOARD TO ADOPT RULES FOR A REGULATORY FRAMEWORK TO REDUCE GREENHOUSE GAS EMISSIONS FROM SOURCES SUBJECT TO ITS JURISDICTION; DIRECTING THE ASSESSMENT OF FEES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 5 of this act may be cited as the "Clean Future Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Clean Future Act:

          A. "carbon dioxide equivalent" means the metric tons of a greenhouse gas that have the same global warming potential based on their relative radiative forcing effect over a specified period of time as one metric ton of carbon dioxide in the atmosphere;

          B. "direct emissions" means greenhouse gas emissions from all regulated sectors;

          C. "direct emissions reduction" means a quantifiable, permanent and verifiable greenhouse gas reduction, including capture or sequestration by technological or geological means by an entity or facility;

          D. "disproportionately impacted communities" means disadvantaged communities or communities or populations of people for which multiple burdens, including environmental and socioeconomic stressors, inequity, poverty, high unemployment, pollution or discrimination, may act to persistently and negatively affect the health, well-being and environment of the communities or populations;

          E. "excess emissions reduction credit" means quantifiable, verifiable and permanent reductions in greenhouse gas emissions, including by direct air capture, carbon sequestration or other technological means, at a source subject to mandatory greenhouse gas reduction requirements in a regulated sector that are in excess of the mandatory requirements;

          F. "greenhouse gas" means gaseous compounds that absorb infrared radiation emitted from the earth's surface and trap heat in the earth's atmosphere, including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride and sulfur hexafluoride, but not including water vapor;

          G. "net-zero emissions" means direct emissions of greenhouse gases that are eliminated, subject to excess emissions reduction credits, or fully offset;

          H. "offset" means an additional, quantifiable, permanent, verifiable and enforceable greenhouse gases reduction, removal or sequestration by biological, technological, chemical or geological means, including by direct air capture by technological or biological means, from a source or facility that is not otherwise subject to mandatory greenhouse gas emissions reduction requirements and which reduction, removal or sequestration is measured in terms of metric tons of carbon dioxide equivalent;

          I. "regulated sector" means any sector or source that is regulated and owned or operated, in whole or in part, by any person and includes electricity generation, both imported and produced in-state; heating, transportation and other fuels combusted in New Mexico; buildings, structures and distribution systems; residential, commercial, institutional and industrial waste management; agricultural and silvicultural practices; and extractive, industrial or other manufacturing processes; and

          J. "state entity" means a cabinet department of the executive branch of state government, the regulation and licensing department, the state land office, the public regulation commission, the New Mexico department of agriculture, the board of regents of the university of New Mexico and the board of regents of New Mexico state university.

     SECTION 3. [NEW MATERIAL] GREENHOUSE GAS EMISSIONS LIMITS--ESTABLISHED.--Emissions of greenhouse gases in New Mexico shall be limited as follows:

          A. by 2030, statewide direct emissions of greenhouse gases shall be fifty percent less than 2005 levels, which may be met by using direct emissions reductions or excess emissions reduction credits; and

          B. by 2050, statewide direct emissions of greenhouse gases shall be ninety percent less than 2005 levels, which may be met by using direct emissions reductions or excess emissions reduction credits, and all remaining emissions after reductions shall achieve at least net-zero emissions in 2050 or any subsequent year.

     SECTION 4. [NEW MATERIAL] REPORTING--DETERMINATION OF 2005 LEVELS.--

          A. Annually, by April 15, beginning the year after the enactment of the Clean Future Act, each state entity shall provide to the department of environment and the energy, minerals and natural resources department information on:

                (1) the qualitative and quantitative impacts of climate change on the state entity's programs and operations and, to the extent known, on disproportionately impacted communities;

                (2) the ways in which the state entity is able to integrate climate change adaptation and mitigation practices into its programs or operations;

                (3) the current and projected future direct emissions of greenhouse gases, to the extent known, from sources or sectors within the state entity's regulatory jurisdiction and the progress being made toward meeting the greenhouse gas emissions limits established in Section 3 of the Clean Future Act; and

                (4) any additional resources, statutory or regulatory authority or programs that could facilitate efforts by the state entity to reduce direct emissions of greenhouse gases from sources or sectors within the state entity's regulatory jurisdiction to meet the greenhouse gas emissions limits established in Section 3 of the Clean Future Act.

          B. Annually, by July 1, beginning the year after the enactment of the Clean Future Act, the department of environment and the energy, minerals and natural resources department shall jointly publish a report on the state's progress toward meeting the greenhouse gas emissions limits established in Section 3 of the Clean Future Act. The first report published shall determine the 2005 levels of statewide direct emissions of greenhouse gases for purposes of determining compliance with the limits established in Section 3 of the Clean Future Act. Additionally, each annual report shall:

                (1) prioritize coordination with and consideration of environmental and economic progress for, and the avoidance of impacts to, disproportionately impacted communities;

                (2) contain an inventory of all statewide greenhouse gas emissions based on best available data and information and the progress being made toward achieving the greenhouse gas emissions limits. The inventory shall include, at a minimum, total direct emissions statewide and sector- and source-specific emissions and source-specific greenhouse gas emission information required to be reported pursuant to rules adopted by the environmental improvement board;

                (3) identify specific policies and regulatory strategies that are either in place or necessary to be in place to achieve the greenhouse gas emissions limits established in Section 3 of the Clean Future Act;

                (4) identify additional programs that could facilitate achievement of the greenhouse gas emissions limits, including programs to reduce greenhouse gas emissions from light-, medium- and heavy-duty vehicles sold in the state and the adoption of updated building and energy codes, and the budgetary resources needed to implement the programs; and

                (5) identify opportunities to increase energy efficiency investments and targets for electric utilities, including opportunities for low-income households.

     SECTION 5. [NEW MATERIAL] POWERS AND DUTIES--DEPARTMENT OF ENVIRONMENT--ENERGY, MINERALS AND NATURAL RESOURCES DEPARTMENT.--The department of environment and the energy, minerals and natural resources department may seek necessary resources from the legislature or other appropriate sources, coordinate the efforts needed in the state and among the state agencies and take any action authorized by law that is deemed necessary or appropriate by the secretary of the respective department for the state to meet the greenhouse gas emissions limits established in Section 3 of the Clean Future Act.

     SECTION 6. A new section of the Air Quality Control Act, Section 74-2-5.4 NMSA 1978, is enacted to read:

     "74-2-5.4. [NEW MATERIAL] DUTIES AND POWERS--ENVIRONMENTAL IMPROVEMENT BOARD--LOCAL BOARD--GREENHOUSE GAS EMISSIONS.--

          A. For the purposes of this section:

                (1) "carbon dioxide equivalent" means the metric tons of a greenhouse gas that have the same global warming potential based on their relative radiative forcing effect over a specified period of time as one metric ton of carbon dioxide in the atmosphere;

                (2) "direct emissions" means greenhouse gas emissions from a source;

                (3) "direct emissions reduction" means a quantifiable, permanent and verifiable greenhouse gas reduction, including capture or sequestration by technological or geological means from a source as approved by the department;

                (4) "disproportionately impacted communities" means disadvantaged communities or communities or populations of people for which multiple burdens, including environmental and socioeconomic stressors, inequity, poverty, high unemployment, pollution or discrimination, may act to persistently and negatively affect the health, well-being and environment of the communities or populations;

                (5) "excess emissions reduction credit" means quantifiable, verifiable and permanent reductions in greenhouse gas emissions, including by direct air capture, carbon sequestration or other technological means, at a source subject to mandatory greenhouse gas reduction requirements or limits that are in excess of the mandatory requirements or limits as approved by the department;

                (6) "greenhouse gas" means gaseous compounds that absorb infrared radiation emitted from the earth's surface and trap heat in the earth's atmosphere, including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride and sulfur hexafluoride, but not including water vapor;

                (7) "net-zero emissions" means direct emissions of greenhouse gases are eliminated, subject to excess emissions reduction credits, or fully offset; and

                (8) "offset" means an additional, quantifiable, permanent, verifiable and enforceable greenhouse gases reduction, removal or sequestration by biological, chemical or geological means, including by direct air capture by technological or biological means, from a source that is not otherwise subject to mandatory greenhouse gas emissions reduction requirements, and which reduction, removal or sequestration is measured in terms of metric tons of carbon dioxide equivalent.

          B. No later than June 30, 2025, the department shall petition the environmental improvement board to promulgate rules to reduce greenhouse gas emissions from sources subject to the Air Quality Control Act. In preparing the petition, the department shall hold meetings in at least three distinct regions of the state where disproportionately impacted communities are located and shall consider the input provided by those communities at the meetings in developing the petition.

          C. Notwithstanding the provisions of Section 74-2-5 NMSA 1978, the environmental improvement board shall have exclusive authority under the Air Quality Control Act to adopt rules to reduce greenhouse gas emissions for purposes of meeting statewide climate goals and emissions limits. The rules shall apply to sources statewide, including sources within the boundaries of a local authority. A local board may adopt greenhouse gas emissions reduction rules in addition to the environmental improvement board rules; provided that rules adopted by the local board shall be at least as stringent as the rules adopted by the environmental improvement board and shall not conflict with rules adopted by the environmental improvement board.

          D. The environmental improvement board shall:

                (1) adopt rules that establish the proportionate share of greenhouse gas emission reductions from sources within the board's jurisdiction necessary to achieve:

                     (a) by 2030, statewide direct emissions of greenhouse gases that are less than fifty percent of 2005 levels, as determined by the department, which may be met by using direct emissions reductions or excess emissions reduction credits, as determined by the department; and

                     (b) by 2050, statewide direct emissions of greenhouse gases that are less than ninety percent of 2005 levels, which may be met by using direct emissions reductions or excess emissions reduction credits, and all remaining emissions after reductions shall be net-zero emissions in 2050 or any subsequent year, as determined by the department;

                (2) consider requirements and reductions achieved or required pursuant to other applicable laws, rules or federal regulations in establishing the proportionate share of emissions reductions from sources within the board's jurisdiction to achieve the limits of Paragraph (1) of this subsection; and

                (3) adopt rules to achieve the limits established pursuant to Paragraph (1) of this subsection, including:

                     (a) greenhouse gas emissions reporting and disclosure requirements;

                     (b) greenhouse gas emissions permitting, limits and reduction requirements. In setting the limits and reduction requirements, the board shall consider: 1) prioritization of reductions in and avoidance of increased impacts on disproportionately impacted communities; and 2) the impacts of any voluntary actions taken by sources after the effective date of the Clean Future Act but before the initiation of the rulemaking process;

                     (c) protocols for the review and approval by the department of offsets and excess emissions reduction credits. The protocols for verifying the reduction, avoidance or sequestration by an offset or an excess emissions reduction credit shall consider: 1) the requirements of any relevant regional offset or excess emissions reduction credit marketplace; 2) the geographic location of any offsets or excess emissions reduction credits; 3) the greenhouse gas being reduced, avoided or sequestered and the nature of the reduction, avoidance or sequestration activity and the impact of the offset; or 4) the impact of offsets or excess emissions reduction credits on disproportionately impacted communities or environmental justice communities;

                     (d) protocols for the transfer, sale and trading of offsets or excess emissions reduction credits, including potential market mechanisms for the development, sale and trading of offsets or credits and potential participation in any applicable regional markets for the same;

                     (e) requirements for sources or sectors not meeting greenhouse gas emission reduction requirements to obtain offsets or excess emissions reduction credits;

                     (f) reasonable fees to be paid by sources. The fees may be based on total direct emissions from a source, the number of offsets or excess emissions reduction credits a source uses to meet the applicable greenhouse gas emission reduction requirements or the sale or transfer of offsets or excess emissions reduction credits by a source, or a combination thereof, and shall cover the reasonable costs of the department to administer the greenhouse gas emissions rules promulgated by the environmental improvement board. The fees collected pursuant to this subparagraph shall be remitted to the state treasurer and deposited in the general fund; and

                     (g) any other requirements the board deems necessary to achieve the limits established pursuant to Paragraph (1) of this subsection."

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