New Mexico is making significant strides toward implementing its recently passed legislation adopting a Clean Transportation Fuel Standard (CTFS), modeled after the clean fuel standards in California, Oregon and Washington, and designed to annually reduce the carbon intensity of transportation fuels.

New Mexico Joins the Ranks of State-Led Clean Fuel Programs
By advancing its Clean Transportation Fuel Standard, New Mexico is joining a growing list of states that have adopted state-specific clean fuel programs, creating new markets and opportunities for biofuels and other low-carbon fuels.

California was the first state to launch a Low Carbon Fuel Standard (LCFS) in 2009, setting a precedent that has greatly benefited the biofuels industry. Oregon followed with its Clean Fuels Program in 2016, and Washington implemented its Clean Fuel Standard in 2023. These programs have driven demand for biofuels, creating opportunities for producers.

New Mexico's CTFS aims to build on past successes by creating a robust biofuels market within the state, while adhering to legislative goals of maintaining a technology-neutral fuel standard. The program targets a 20% reduction in the carbon intensity of transportation fuels by 2030 and a 30% reduction by 2040, compared to the state's 2018 baseline.

As the state moves through the rulemaking process, key stakeholders are playing an essential role in shaping the program's development.

The Rulemaking Process and Advisory Committee
The New Mexico Environmental Improvement Board (EIB) is leading the charge in the rulemaking process for the CTFS. A key mandate of the Board is to promulgate rules for the standard's implementation by July 1, 2026. To help ensure the program is comprehensive and balanced, the Environment Secretary convened a CTFS Advisory Committee to provide technical input on the rules that will govern the state's program.

The New Mexico Environment Department (NMED) sought Advisory Committee members from a broad spectrum of stakeholders, including third-party verification bodies, transportation fuel producers and distributors, utilities, environmental protection groups, environmental justice groups, tribal and local government representatives, as well as other experts. This diverse group provided the initial technical expertise necessary to help guide the CTFS' development.

The 31-member Advisory Committee participated in a series of meetings this summer to explore critical aspects of the CTFS, with presentations from various industry and policy professionals that shaped the ongoing discussions.

Key Insights from Advisory Committee Presentations
• Michael Ford from the NMED Climate Change Bureau presented an overview of the current transportation fuels used in New Mexico, along with fuel lifecycle analysis and credit generation opportunities under the CTFS.

• Cory-Ann Wind of Clean Fuels Alliance America gave an overview of biodiesel and renewable diesel and presented credit-generating statistics from other states’ LCFS programs.

• Valero & Rio Valley Biofuels provided insights into New Mexico’s transportation fuel supply chains, discussing regulated fuels and offering a historical perspective from the state’s first biodiesel producer.

• Graham Noyes of Noyes Law Corporation addressed the potential crediting of alternative jet fuel (AJF) and off-road fuel crediting opportunities, emphasizing the need for scalable Sustainable Aviation Fuel (SAF) production. He also recommended that New Mexico consider including jet fuel under the CTFS to avoid the disincentives seen in California’s opt-in model for SAF credits.

• Evan Rosenberg of SRECTrade outlined the role of EV charging under clean fuel standards, focusing on how electric vehicle infrastructure can generate credits.

• Gabriel Pacyniak from the UNM School of Law discussed environmental justice concerns, highlighting the risks of increased NOx emissions from biofuels and how some credited mechanisms might worsen upstream pollution. He also warned that the benefits of electrification could be skewed toward affluent consumers unless measures are taken to ensure equitable access to electric vehicles (EVs).

• Travis Madsen of SWEEP (Southwest Energy Efficiency Project) stressed the importance of ensuring that credits are real, additional, verifiable and permanent under the program, and suggested a cap on biofuels.

• Sam Wade from the Coalition for Renewable Natural Gas discussed the role of renewable natural gas (RNG) in New Mexico’s CTFS, offering perspectives on its potential to contribute to the program’s carbon reduction goals.

• Matthew Weyer from Taos Ski Valley detailed the resort’s efforts to become net-zero by 2030, sharing their experience in testing Renewable Diesel-99 (RD-99) fuel in partnership with Marathon Petroleum and its efforts to procure more renewable diesel.

These presentations offered the committee a comprehensive look at the technical, environmental and market aspects of clean fuel standards, providing the foundation for subsequent discussions.

Advisory Committee Members were also given the opportunity to provide oral and written technical input. This input was compiled and makes up New Mexico’s official Clean Transportation Fuel Standard Advisory Committee Technical Report. This report is not a consensus document, but rather a collection of the varied technical opinions presented by the committee members.

NMED provided 11 prompts to the Advisory Committee to solicit written input.

• What do you see as best practices that the NMED should consider for the first years of New Mexico’s CTFS program?

• How can NMED make it as easy as possible to generate clean fuel credits within New Mexico’s CTFS program while ensuring that clean fuel credits represent real reductions in carbon intensity?

• How might NMED design a CTFS program to benefit New Mexican communities, especially those who live in low-income and disadvantaged communities?

• What information about New Mexico fuel markets does NMED need to know in analyzing New Mexico CTFS program options?

• How will New Mexico’s CTFS program need to regulate deficit-generating fuels in New Mexico differently than the processes in West Coast states?

• What might NMED incorporate in the CTFS program to attract businesses and supply chains to New Mexico? NMED is interested in learning more about specific credit-generating fuels (e.g. renewable diesel, biodiesel, electricity, hydrogen, etc.)?

• Presuming that the NMED CTFS program will likely use lookup tables for the CI value of regulated and some opt-in fuels, what might NMED consider in determining the well-to-wheel CI values that are used for this approach?

• What does New Mexico’s CTFS program need to calculate CI for grid and renewable power, and the volumes of it used for transportation? What are the best sources of available data?

• What might New Mexico’s CTFS program take into consideration in deciding whether to use an annual statewide versus utility-specific CI for electric grid power?

• How might NMED design the CTFS program’s deferral mechanism?

• What does NMED need to consider when defining “emergency or forecasted conditions?”

These prompts, along with the presentations, provided input for shaping a CTFS that aims to balance economic growth, environmental protection and equitable treatment of low-carbon fuels.

The perspectives captured in this technical report offer a robust foundation for NMED as it begins the formal rulemaking process, ensuring that the CTFS is informed by a wide array of technical expertise and viewpoints.

Feedstock Caps and Certification Challenges
As New Mexico moves forward with its CTFS, biofuel proponents must remain vigilant about potential regulatory challenges. The biofuels industry is already encountering issues in other states, such as California, where efforts to impose caps on biomass-based feedstocks and implement burdensome sustainability certification requirements could disrupt market growth. While often driven by concerns over land use and sustainability that seemingly lack scientific backing, these measures can lead to unintended and counterproductive consequences.

Feedstock caps, in particular, can place limits on the amount of certain materials—especially crop-based feedstocks like corn and soy—that can be used in biofuel production. While intended to prevent over-reliance on specific crops, these restrictions can stifle innovation and limit the ability of biofuel producers to expand. Additionally, burdensome certification requirements, if not scientifically grounded, could disproportionately affect crop-based feedstocks and create unnecessary barriers for producers.

New Mexico’s CTFS legislation explicitly mandates technology neutrality, and it is critical that the final program reflects this principle. Maintaining an open and flexible approach to all types of low-carbon fuels—whether crop-based biofuels, waste-derived fuels or renewable electricity—is key to ensuring that the CTFS encourages innovation, maximizes emissions reductions, and supports a diverse and resilient energy market.
Looking Ahead
As the rulemaking process progresses, the EIB is working to craft a program that maximizes economic benefits while ensuring environmental responsibility. The Board's deadline to promulgate the necessary rules by July 1, 2026, adds a sense of urgency to these efforts. The detailed report provided by the Advisory Committee, reflecting the technical input and diverse perspectives gathered throughout the process, will be a critical resource for NMED as it moves forward.

However, biofuel proponents must continue to push back against any potential regulatory barriers, such as feedstock caps or onerous certification requirements, that could stifle the industry’s growth. By ensuring the CTFS remains technology-neutral and supportive of a broad range of low-carbon fuel technologies, New Mexico is well-positioned to emerge as a leader in the biofuels sector.

New Mexico's Clean Transportation Fuel Standard is set to create fertile ground for the expansion of the biofuels industry. The ongoing rulemaking process, supported by a comprehensive advisory process and a deadline of July 1, 2026, is crucial to ensuring that this program is designed to support economic growth while contributing to the state's broader energy goals. As New Mexico integrates into the network of state-led clean fuel programs, it is opening the door to new opportunities for biofuels and reinforcing its commitment to a prosperous future.

Authors: Kari Buttenhoff, Partner at Christianson PLLP kbuttenhoff@christiansoncpa.com
Danielle Anderson, Senior Advocacy and Policy Manager at Christianson PLLP danderson@christiansoncpa.com

New Mexico fuels consumption chart Source: NMED, sourced from the U.S. Energy Information Administration, State Energy Data System: New Mexico. https://www.eia.gov/beta/states/states/nm/data/dashboard. Note: All fuel types largely used for transportation, but data is for total overall consumption. New Mexico has no diesel-fired power generation. Note: Electricity not included because there is no data on volumes consumed for transportation at the state level. Renewable diesel volumes are zero. *Ethanol and biodiesel volumes are subtracted from finished motor gasoline and diesel volumes and listed separately.

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