Natural Gas Laws and Incentives in New Mexico
The list below contains summaries of all New Mexico laws and incentives related to natural gas.
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)
Alternative Fuels Tax
Alternative fuels subject to the New Mexico excise tax include propane, compressed natural gas (CNG), and liquefied natural gas (LNG). The excise tax imposed on propane is $0.12 per gallon, and the excise tax imposed on CNG and LNG is $0.133 and $0.206 per gallon, respectively. A gallon is measured as 3.785 liters of propane, 5.66 pounds (lbs.) or 126.67 standard cubic feet of CNG, and 6.06 lbs. of LNG. Alternative fuel purchased for distribution is not subject to the excise tax at the time of purchase or acquisition, but the tax is due on any alternative fuel at the time it is dispensed or delivered into the tank of a motor vehicle. Alternative fuel distributors must be licensed by the state. For tax forms and instructions, refer to the New Mexico Taxation and Revenue Department website. (Reference New Mexico Statutes 7-16B-1 through 7-16B-10)
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)
Public Utility Definition
An entity that is not a regulated utility that resells natural gas or electricity as motor fuel is not defined as a public utility. (Reference New Mexico Statutes 62-3-4)
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 2020. (Reference Executive Order 2019-003, 2019)
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 Vehicle (AFV) Loans
The New Mexico Energy, Minerals and Natural Resources Department’s Alternative Fuel Acquisition Revolving Loan Program provides loans to state agencies, political subdivisions, and educational institutions for AFV acquisitions. Funds must be used for the purchase of vehicles that operate on natural gas, propane, electricity, or hydrogen. The maximum amount of a loan per vehicle must not exceed the incremental cost of acquiring the vehicle or the following amounts:
|Gross Vehicle Weight Rating (GVWR)||Incentive Amount|
|Up to 14,000 pounds (lbs.)||$5,000|
|14,000 lbs.-26,000 lbs.||$10,000|
|Over 26,000 lbs.||$20,000|
Projected fuel cost savings from using the AFV is considered when the loan repayment schedule is developed. For more information, see the New Mexico Energy Roadmap Project Goal & Strategy Documentation website.
(Reference New Mexico Statutes 13-1B-1 through 13-1B-7)
Biomass Tax Credit
Dairy or feedlot owners may receive a tax credit of up to $5 per wet ton of agricultural biomass that is used to generate electricity or to make liquid or gaseous fuel for commercial use. (Reference New Mexico Statutes 7-2-18.26)
Diesel Emission Reduction Funding
The New Mexico Environment Department (NMED) is accepting applications for funding for heavy-duty on-road new diesel or alternative fuel repowers and replacements, as well as off-road all-electric repowers and replacements. Vehicles that qualify for replacement or repower include:
- Model Year (MY) 1992-2009 Class 8 local freight trucks and port drayage trucks;
- MY 1992-2009 Class 4-7 local freight trucks;
- MY 2009 or older Class 4-8 school buses, shuttle buses, and transit buses;
- Forklifts with greater than 8,000 pounds of lift capacity;
- Port cargo handling equipment; and
- High emissions diesel-powered or spark ignition airport ground support equipment.
Idle Reduction and Natural Gas Vehicle (NGV) Weight Exemption
Any vehicle or combination of vehicles equipped with idle reduction technology may exceed the state's gross and axle weight limits by up to 400 pounds (lbs.) to compensate for the additional weight of the idle reduction technology. A vehicle primarily powered by natural gas may exceed the state's gross vehicle weight limits by a weight equal to the difference between the average weight of the vehicle with the natural gas tank and fueling system and the average weight of a comparable vehicle with a diesel tank and fueling system. The NGV maximum gross weight may not exceed 82,000 lbs. (Reference New Mexico Statutes 66-7-410)
More Laws and Incentives
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