After nearly six hours of debate Thursday, the House Energy, Environment and Natural Resources Committee voted 6-4 to table House Bill 4 — aimed to make the state a hub of hydrogen production by offering tax incentives to develop the infrastructure to separate the energy source from natural gas.
The hearing was the bill's first hurdle during the legislative session. It's unclear whether it will get a second chance. Legislation that has been tabled in a committee rarely is revived for discussion or another vote.
A spokeswoman for Lujan Grisham said the governor expects to work with the Legislature to "identify a successful path forward for this important legislation" before the end of the session in mid-February.
But Rep. Patti Lundstrom, D- Gallup, the lead sponsor of HB 4, wrote in a text message Thursday she intends to leave the bill where it is now — tabled in the energy committee.
Asked if a similar bill might be introduced in the House during this session, she replied, "No."
Chris Nordstrum, a spokesman for Senate Democrats, said "it's not looking likely" for a hydrogen bill to be introduced in that chamber, either.
Lujan Grisham's goal was to move quickly on developing the framework for the new hydrogen industry so New Mexico could draw some of the $8 billion for the industry included in the massive federal infrastructure bill approved by Congress and signed into law last year by President Joe Biden. The law calls for four initial leading "hydrogen hub" states in the nation and offers an additional $1 billion in assistance for hydrogen technology research and development.
During the House energy committee's debate, Lundstrom said money from the federal infrastructure act could help make New Mexico the nation's leader in hydrogen production. However, she added, the state would move forward with the initiative even if it didn't receive the federal funds.
The process of separating hydrogen from natural gas includes capturing carbon dioxide and storing it underground. The remaining hydrogen has a wide range of uses, from powering electric plants to fueling transportation to heating homes.
While the governor's hydrogen plan has had support from the oil and gas industry, it has met fierce opposition by environmental groups and progressive Democrats who say the use of natural gas would increase fossil fuel production and lead to further emissions of greenhouse gases during a climate crisis.
Tom Solomon, a retired electrical engineer and co-coordinator of 350 New Mexico, a climate advocacy group, said he was pleased the bill was tabled.
"I would rather it had been voted down completely," he said. "Having it not proceed is the best next thing."
Robert McEntyre, a spokesman for the New Mexico Oil and Gas Association, wrote in an email the state should "embrace policies that put our state at the center of this innovation not outside of it."
"Low carbon hydrogen has the potential to build on New Mexico's existing energy strengths while delivering jobs, investment, and growth like we've seen in the Permian and San Juan basins in recent years," he wrote. "Advancements in carbon management technology will deliver the ever-cleaner energy New Mexicans and Americans need for daily life."
Some lawmakers on the energy committee called Lundstrom's 68-page bill "complicated" during Thursday's virtual hearing.
Committee members raised a number of questions about the technology needed to pursue the plan, how much it would cost and how it would affect the environment.
Rep. Miguel García, D- Albuquerque, said he feared the bill would lead to "more fracking, more pipelines and more deterioration of our environmental quality."
He joined Rep. Matthew McQueen, D- Galisteo, and the committee's four Republican members — who all represent districts rich in oil and gas — in voting to prevent the bill from moving forward.
Nora Meyers Sackett, Lujan Grisham's press secretary, wrote in an email, "The failure to move the Hydrogen Hub Development Act forward will put New Mexico's ability to reach net-zero carbon emissions by 2050 at risk.
"In her State of the State speech last week, the governor encouraged legislators to think boldly to reject the status quo — we ask legislators to look toward a future with zero emissions and a healthy and diverse economy in all corners of New Mexico," Sackett added.
Lujan Grisham first talked of turning New Mexico into a hydrogen hub in the fall. She said in an interview on the national podcast Everything About Hydrogen the state could "leap-frog" over other states in its effort to produce hydrogen from natural gas, which would create both energy and jobs.
Earlier this month, she announced the hydrogen hub bill was one of her legislative priorities.
But when it was introduced earlier this week, leading Democrats in the House and Senate showed little open support for it.
Several of the governor's Cabinet secretaries testified in favor of HB 4 on Thursday, including Economic Development Secretary Alicia J. Keyes and Environment Secretary James Kenney.
About 30 people spoke in favor of the bill, extolling its potential to pump money into the state and create jobs. Advocates also said the bill would help reduce greenhouse gas emissions in New Mexico over time.
A higher number of people — about 40 — testified against the bill, raising concerns it would benefit the oil and gas industry the most. Several opponents said they were speaking on behalf of tribal communities that had not been included in discussions about potential effects of the proposed industry on their residents.
Republican Rep. Jim Townsend of Artesia made the motion to table the bill. He later declined to comment on the measure or his action.
Fellow Republican Rep. Rod Montoya of Farmington said he was concerned the state was moving too quickly on the bill to meet a deadline this year to apply for the federal funds. " Native Americans are not for this energy," he added.
Two lawmakers who voted to table to the measure — Rep. James Strickler, another Farmington Republican, and GOP Rep. Larry Scott of Hobbs, questioned whether the new hydrogen industry would have a financial payoff for the state.
"I fear that we may be developing an industry that over the long term does not survive without taxpayer support or, as an alternative, significantly increase costs to our consumers," Scott said.
Strickler said the bill "just needs a little more work."
"These exotic energy opportunities are so expensive," he said.
The bill's fiscal impact report said it would cost the state an estimated $890,000 to get the hydrogen industry started in its first three years, a figure Lundstrom described as "pretty marginal."
But the report also said there would be a number of "indeterminate" recurring expenses, such as for hydrogen refueling station equipment.
The report also said the tax incentives would come "with a cost that is difficult to determine but likely significant" and that "revenues may be insufficient to cover recurring appropriations."
Before the discussion began, McQueen noted 299 people were watching the virtual meeting. He took a virtual poll, he said, which found 73 percent of viewers were against the bill and just 27 percent were in favor of it.
"That's a pretty robust response," he said.
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