Hydrogen Laws and Incentives in New Mexico
The list below contains summaries of all New Mexico laws and incentives related to hydrogen.
Laws and Regulations
Alternative Fuel Definition
Alternative fuels are defined as natural gas, propane, electricity, hydrogen, fuel mixtures containing not less than 85% ethanol or methanol, and fuel mixtures containing not less than 20% vegetable oil, or a water-phased hydrocarbon fuel emulsion in an amount not less than 20% by volume. Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from agricultural plant oils or animal fats and meets current ASTM pure biodiesel (B100) standards.
(Reference New Mexico Statutes 13-1B-2 and 57-19-27)
Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Acquisition Requirements
A minimum of 75% of state government and educational institution fleet light-duty vehicles purchased must be HEVs or bi-fuel or dedicated AFVs. Vehicles must meet or exceed the federal corporate average fuel economy standards. Certified law enforcement pursuit vehicles and emergency vehicles are exempt from this requirement. The New Mexico Energy, Minerals and Natural Resources Department may grant additional exemptions based on the availability and suitability of vehicles, as well as fuel availability and cost.
(Reference New Mexico Statutes 13-1B-1 through 13-1B-7)
Energy and Fuel Cost Savings Contracts
Government fleets may finance alternative fuel vehicles or related infrastructure through guaranteed utility savings contracts where vehicle operational and fuel cost savings pay for the capital investment. Guaranteed utility savings contracts must show that the cost savings resulting from the alternative fuel and infrastructure projects are equal to or higher than the annual contract payments.
(Reference New Mexico Statutes 6-23-2 and 6-23-3)
Low Carbon Fuel Standard
The New Mexico Environment Improvement Board must implement rules to establish a Clean Transportation Fuel Standard Program (Program) that reduces the overall carbon intensity of transportation fuels used in the state by at least 20% below 2018 carbon intensity levels by 2030 and at 30% below 2018 carbon intensity levels by 2040. The Program must go into effect no later than July 1, 2026. For more information, see the New Mexico Environment Department Clean Fuel Standard website.
(Reference House Bill 41, 2024)
Medium- and Heavy-Duty Zero Emission Vehicle (ZEV) Requirement
New Mexico has adopted the California Advanced Clean Trucks requirements specified in Title 13 of the California Code of Regulations requiring manufacturers to meet California’s ZEV production and sales requirements. Beginning with model year 2027, manufacturers will be required to sell zero-emission trucks as an increasing percentage of their annual sales for Class 2b through Class 8 vehicles in New Mexico. ZEVs include all-electric and fuel cell electric vehicles. For more information, see the New Mexico Environment Department Transportation website.
(Reference New Mexico Environment Department Docketed Matters, EIB 23-56 (R) and New Mexico Administrative Code 20.2.91)
State Agency Low- and Zero-Emission Vehicle Acquisition Requirements
When acquiring new vehicles, all state agencies must purchase all-electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), or fuel cell electric vehicles (FCEVs) when one or more models are available for purchase. By 2035, 100% of vehicles in the state fleet must be EVs, PHEVs, or FCEVs. The New Mexico General Services Department and New Mexico Department of Transportation must create fleet purchasing requirements that support these acquisition requirements. State agencies must propose annual vehicle and charging station acquisition and deployment targets to meet the 2035 fleet transition goal.
(Reference Executive Order 2023-138, 2023)
State Emissions Reduction Strategy
The governor established the Climate Change Task Force (Task Force) to evaluate strategies to reduce GHG and criteria pollutant emissions in New Mexico, including potential low emission vehicle and ZEV standards. New Mexico will pursue GHG emissions reduction of at least 45% below 2005 levels by 2030. The Task Force developed a climate strategy with initial recommendations in 2019 and published a progress report in 2021. For more information, see the Task Force website.
(Reference Executive Order 2019-003, 2019)
Zero Emission Vehicle (ZEV) Sales Requirements and Low Emission Vehicle (LEV) Standards
New Mexico has adopted the California motor vehicles emissions standards and compliance requirements in the Title 13 of the California Code of Regulations. Manufacturers must meet the greenhouse gas emissions standard and the ZEV production and sales requirements, beginning with model year (MY) 2026. These regulations apply to new passenger cars, light-duty trucks, and sport utility vehicles.
In November 2023, New Mexico adopted the California vehicle emissions standards and compliance requirements set forth in the California Air Resources Board Advanced Clean Cars II regulation. These new emissions standards and requirements will begin with MY 2027 and require that 82% of new passenger vehicles sold in New Mexico must be ZEVs by 2032.
For more information, see the New Mexico Environment Department Transportation website.
(Reference New Mexico Environment Department Docketed Matters, EIB 21-66 (R) and New Mexico Administrative Code 20.2.91)
State Incentives
Alternative Fuel Tax Exemption
Alternative fuel distributed by or used for federal government, state government, or Indian nation, tribe, or pueblo purposes is exempt from the state excise tax.
(Reference New Mexico Statutes 7-16B-5)
Alternative Fuel and Advanced Vehicle System Manufacturing Incentive
The Alternative Energy Product Manufacturers Tax Credit provides credit against combined reporting taxes (gross receipts, compensating, and withholding) for qualified manufacturers of alternative energy products, including hydrogen and fuel cell vehicle systems, and electric and hybrid electric vehicles. The credit is limited to 5% of qualifying expenditures, and manufacturers must fulfill job creation requirements to be eligible. Qualified manufacturers must apply for and receive approval from the New Mexico Taxation and Revenue Department before they may claim the credit. For more information, including eligibility and application details, refer to the New Mexico’s Industry-Specific Tax Incentives website.
(Reference New Mexico Statutes 7-9J-1 through 7-9J-8)
Biofuels Production Tax Deduction
The cost of purchasing qualified biomass feedstocks to be processed into biofuels, as well as the associated equipment, may be deducted in computing the compensating tax due under the New Mexico Gross Receipts and Compensating Tax Act. For the purpose of this incentive, biofuels include ethanol, methanol, methane, and hydrogen.
(Reference New Mexico Statutes 7-9-98)
Diesel Emission Reduction Funding
The New Mexico Environment Department (NMED) provides U.S. Environmental Protection Agency Diesel Emission Reduction Act (DERA) funding for heavy-duty on-road new diesel or alternative fuel repowers and replacements, as well as off-road all-electric repowers and replacements, with priority to hydrogen fuel cell projects. Vehicles that qualify for replacement or repower include:
- School buses;
- Class 5 transit buses;
- Class 5-8 heavy-duty vehicles; and,
- Non-road engines, equipment, or vehicles used in construction, cargo handling, agriculture, mining, or energy production.
For more information, see the NMED DERA website.
More Laws and Incentives
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