New Mexico’s Clean Transportation Fuel Program Marks Major Expansion of Low Carbon Fuel Policy

January 22, 2026

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(Clean Fuels Alliance America) Clean Fuels Alliance America applauds the New Mexico Environment Improvement Board for approving the rules for New Mexico’s Clean Transportation Fuel Program. This action marks a significant expansion of low-carbon fuel policy beyond the West Coast, demonstrating that a state that leads in energy production can also lead in meaningful decarbonization.

Signed into law in March 2024, House Bill 41 made New Mexico the fourth state in the nation to adopt a low carbon fuel standard. The policy requires providers of transportation fuels to reduce the average carbon intensity of fuels sold in the state by 20% by 2030 and 30% by 2040, compared to a 2018 baseline.

“From a market perspective, New Mexico represents an almost 800-million-gallon opportunity for the biomass-based diesel industry,” said Cory-Ann Wind, Director of State Regulatory Affairs for Clean Fuels. “Since it sits along a key corridor for both feedstocks and finished fuels produced in the Gulf Coast and Midwest, New Mexico’s entry into the market not only expands the demand for clean fuels but further strengthens the supply chain”.

New Mexico’s leadership is particularly significant given its role as the second-largest oil-producing state in the U.S. and the fourth-largest natural gas producer.

“As the first non–West Coast state to implement a clean fuel standard, New Mexico proves that states with strong energy economies can also lead on clean fuel deployment and market certainty,” said Jeff Earl, Director of State Governmental Affairs for Clean Fuels. “This program adds real momentum to clean fuel standard adoption nationwide.”

Clean Fuels served on the advisory committee that developed the program’s regulations, working in collaboration with the Low Carbon Fuels Coalition to pass the enabling legislation.

Clean Fuels has long advocated for biomass-based diesel producers in New Mexico and looks forward to working with regulators and stakeholders to ensure a durable, science-based program that delivers environmental benefits while supporting fuel affordability, supply reliability and economic growth.

ABOUT CLEAN FUELS ALLIANCE AMERICA

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil, and animal fats, the clean fuels industry is a proven, integral part of America’s clean energy future. Clean Fuels Alliance America is the U.S. trade association representing the entire biodiesel, renewable diesel and sustainable aviation fuel supply chain, including producers, feedstock suppliers and fuel distributors. Clean Fuels receives funding from a broad mix of private companies and associations, including the United Soybean Board and state checkoff organizations. READ MORE

Related articles

New Mexico Adopts Clean Transportation Fuel Program (Food & Water Watch)
New Mexico agency approves rule to implement Clean Transportation Fuel Program (Ethanol Producer Magazine)
Sunrise Approaches for the New Mexico CTFP (Stillwater Associates)
OPIS Launches New Mexico Clean Transportation Fuel Program Pricing Ahead of 2026 Program Start (OPIS)
New Mexico Clean Transportation Fuel Program: New Market Opportunity for Biofuels (Noyes Law Corp./Biomass Magazine)

Excerpt from Food & Water Watch: Today (January 22, 2026), New Mexico’s Environmental Improvement Board voted to approve the final rules of the Clean Transportation Fuel Program – New Mexico’s new program that will create a statewide “carbon intensity” standard for transportation fuels, and a marketplace to buy, trade and sell carbon credits to meet that standard.

Food & Water Watch Factory Farm Organizing Manager Alexa Reynaud released the following statement:

“New Mexico has taken seriously the reality that programs like the Clean Transportation Fuel Program can perversely incentivize factory farms to pollute. NMED and the EIB have attempted to address these concerns by adding some vital guardrails into the program. Unfortunately, the risk remains for New Mexico’s program, and more programs like these are popping up every year across the country with even more incentives for factory farms to inundate our communities with even more pollution. No climate programs should reward factory farms for polluting.” READ MORE

Excerpt from Ethanol Producer Magazine: The New Mexico Environment Department expects the CTFP to boost economic development across the state, create more than 800 jobs, and reduce health care costs by improving air quality. Overall, the program is expected to deliver $1.65 billion in net benefits to New Mexicans through avoided air quality health impacts and climate change infrastructure damages. Cumulatively through 2040, the program will prevent 337 asthma cases, 60 work-loss days, 59 school-loss days, and 353 restricted activity days for children.

By 2030, the agency expects the program to reduce PM2.5 by 144 tons, VOCs by 200 tons, and NOx emissions by 169 tons. The program will also move New Mexico closer to meeting the state’s goal of cutting climate pollution 45% by 2030 and achieving net-zero emissions by 2050.

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Graham Noyes, managing partner at Noyes Law Corp., said the rulemaking to establish New Mexico’s CTFP was unique in terms of the high volume of stakeholder involvement. During the rulemaking process New Mexico Environment Department made multiple changes to the to the regulations based on feedback they received from program stakeholders, he explained.

Noyes represented three different sets of clients during the rulemaking process, including electro-fuels company Infinium; Verde Clean Fuels, a developer of methane-to-gasoline projects; and sustainable aviation fuel (SAF) producers Gevo Inc., NXT and World Energy.

While New Mexico’s new CTFP share many characteristics with similar programs in California, Washington and Oregon, it’s treatment of SAF is unique. “Instead of having a declining benchmark for alternative jet fuel, there is a fixed benchmark because it’s an opt-in fuel,” Noyes said. “That’s going to enable SAF crediting to get larger with time compared to diesel fuel.” As a result, Noyes said the program will have the most advantaged crediting for SAF beginning in 2028. He also noted New Mexico’s CTFP offers a unique advantage to alternative fuel producers “in that has the most flexible book and claim provisions for energy and heat souring.”

While California, Washington and Oregon are known for support of renewable energy, New Mexico is unique in that it has historically been a predominately oil and gas state. According to the U.S. Energy Information Administration, New Mexico was the number two ranked state for oil production in 2024 and is also a top-10 natural gas producer. “New Mexico really designed a unique program recognizing that its an oil and gas state, and we think it sets a really great precedent for other in the future,” Noyes said.

Additional information is available on the New Mexico Environment Department website. READ MORE

Excerpt from Stillwater Associates: On January 22, 2026, the New Mexico Environmental Improvement Board (EIB) unanimously adopted regulations to implement the Clean Transportation Fuels Program effective April 1, 2026. The final regulations, as adopted, have not yet been published – that will occur after the EIB meets on February 12 to adopt the final statement of reasons (FSOR) – but the most recently published draft of the regulations is available here. At this point, we do not have information on any differences between this draft and what was adopted by the EIB on January 22nd. Note: We have previously written about the regulations while they were in development (here and here).

Similarities and Differences

The general structure of the CTFP is similar to the existing LCF programs in California, Oregon, and Washington. Key points of similarity include:

Reporting requirements; definitions of credits & deficits, retiring of credits to meet deficits and processes for registration and pathways;
Use of default carbon intensities (CIs) for common fuels;
Use of book-and-claim provisions for gaseous fuel;
Provisions for approval of specific pathways, including pathways approved by other states adjusted for transportation distance and indirect land use change (ILUC);
Similar methods of calculating CI from electricity;
Use of Project Credits (California only); and
Provisions for First Reporting Entity.

There are also a few significant differences from the other programs, including:

Lower baseline CIs for petroleum fuels because New Mexico has a different mix of supplying refineries with less carbon-intensive crude slates than what is employed on the West Coast;
A CI-reduction schedule that requires significantly faster reductions than in the existing low-carbon fuel programs at similar stages of development; and
Holding limits for credits by obligated parties.

A Quickening Pace

With respect to the rapid pace of annual CI reductions, New Mexico’s program begins with a 1.8% CI-reduction requirement in 2026 and progresses rapidly to a 20% reduction by 2030 and a 30% reduction by 2040 measured against a 2018 petroleum-only baseline. This pace of CI reductions is compared to the California, Oregon, and Washington programs in Figure 1, below. As New Mexico’s baseline is petroleum only, existing usage of ethanol and biodiesel in the state will make an important contribution towards the credits required this year.

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Given the very short timeline for the start-up of this program, it is expected that the CTFP will be heavily reliant upon adopting pathways already approved in the existing LCF states. All market participants will be required to register promptly and pay the required registration fees. To facilitate this rapid pace, the nine months of 2026 (April through December) and all of 2027 will be combined into a single compliance period with the first compliance deadline in 2028. Subsequent compliance periods will be one year long. READ MORE

Excerpt from OPIS: Industry-Leading Carbon Market Intelligence Provider Expands LCFS Benchmarks to Fourth U.S. State -- PIS, a Dow Jones company and the leading provider of energy pricing and market intelligence, today announced the launch of daily price assessments for New Mexico’s Clean Transportation Fuel Program (CTFP), going live in step with the state program’s April 1 start date.

The new assessments, integrated into OPIS’s Biofuels Daily Report, will provide critical pricing transparency for credit trading in New Mexico’s emerging low-carbon fuel market. The addition strengthens OPIS’s position as the authoritative benchmark provider for U.S. Low Carbon Fuel Standard (LCFS) programs, joining established assessments for California, Oregon and Washington.

Market-Ready Infrastructure

Our New Mexico CTFP pricing, integrated into the Biofuels Daily Report, includes:

Daily NM CTFP credit assessments – low, high, and average values
Carbon intensity values for ethanol, biodiesel and renewable diesel
Cost per gallon values for gasoline and diesel
Deal logs – Full transparency into market transactions

Proven Leadership in LCFS Markets

OPIS has established a dominant benchmark standing in the low-carbon fuels space over the past five years, with multiple exchanges launching futures contracts around its prices:

ICE LCFS futures volumes increased 150% in 2025, with the equivalent of over 65 million tons traded
ICE LCFS options surged 475% in 2024, growing to over 53,000 tons of open interest
ICE also saw its physically deliverable Washington Clean Fuel Standard and Oregon Clean Fuels Program products trade during 2025

The New Mexico program will affect biofuels producers, refiners, importers, retailers, wholesalers, jobbers and blenders across the state’s transportation fuel supply chain.

Find out more about the OPIS Biofuels Daily Report

About OPIS

OPIS, a Dow Jones company, provides accurate pricing, real-time news and expert analysis across the global fuel supply chain, including the Spot, Wholesale Rack and Retail markets. OPIS and its brands, McCloskey, PetroChem Wire, Axxis and Chemical Market Analytics, enable customers to buy and sell energy commodities with confidence across the globe via easy access to transparent data, expert-level customer support, educational events and energy data solutions. OPIS assessments reflect confirmed bids, offers and trades reported by approved traders, brokers and electronic platforms. Full details about OPIS pricing methodologies are available at opisnet.com/about/methodology.

About Dow Jones

Dow Jones is a global provider of news and business information, delivering content to consumers and organizations around the world across multiple formats, including print, digital, mobile and live events. Dow Jones has produced unrivaled quality content for more than 130 years and today has one of the world’s largest news-gathering operations globally. It is home to leading publications and products including the flagship Wall Street Journal, America’s largest newspaper by paid circulation; Barron’s, MarketWatch, Mansion Global, Financial News, Investor’s Business Daily, Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, OPIS and Chemical Market Analytics. Dow Jones is a division of News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV). READ MORE

Excerpt from Noyes Law Corp./Biomass Magazine: The newly approved program mandates the fastest carbon intensity reduction in the U.S.: 20% by 2030, starting in April. New Mexico is the first state outside of the Pacific Coast Collaborative to adopt a clean fuels program, and the first major oil- and gas-producing state to adopt a program.

During the proceedings, New Mexico set a new gold standard for both stakeholder engagement and maximal integration of stakeholder recommendations. The state’s rulemaking process is extraordinary in that stakeholders are allowed to participate as active parties in the rulemaking. The New Mexico Environment Department was the petitioner with the burden to make the case to the board that the proposed regulations should be approved. Parties in this type of New Mexico rulemaking have the right to give opening and closing arguments, present witnesses, cross-examine the petitioner’s and other parties’ witnesses, present rebuttal testimony and file motions.

The rulemaking proceeded in distinct phases. It was initiated when the Environment Department filed a petition and the first version of the proposed regulations. Parties could then file notices of appearance, notices of intent to testify and submit written testimony. Hearing Officer Felicia Orth then adeptly presided over a two-week session of contentious but cordial case-in-chief direct testimony and cross-examinations that were primarily conducted in person in Santa Fe, but with some witnesses, parties and attorneys participating remotely. The first nine days of hearings began in September and ended in October. Following a break for rebuttal testimony and motions, Hearing Officer Orth convened a one-week session of rebuttal testimony and cross-examinations in November. Closing arguments and legal briefs were due in late December. In January, the board held three days of deliberations that examined every aspect of the program, and ultimately the board approved the final version of the proposed regulations with only minor revisions.

Parties in the rulemaking included New Mexico Oil & Gas Association, the Coalition for Clean Affordable Energy, Oxy USA, HF Sinclair, American Fuel & Petrochemical Manufacturers, RNG Coalition, Food & Water Watch, Southwest Airlines, Low Carbon Fuels Coalition, Growth Energy, Rio Valley Biofuels and several individuals appearing pro se. Along with experienced New Mexico co-counsel Anne Minard, I had the privilege of representing Infinium Operations LLC, Verde Clean Fuels Inc. and the SAF Producer Group, which includes Gevo, NEXT Renewable Fuels Inc. and World Energy LLC.

Subsequent to the filing of the petition and at multiple junctures in the rulemaking, the Environment Department made revisions to the proposed regulations based on the testimony, evidence and arguments that had been presented. After a robust public process and many months of pre-hearing meetings with stakeholders and the hearings before the board, the Environment Department crafted a groundbreaking southwestern clean fuel program with many unique components.

On the final day of the rebuttal proceedings, NMED Climate Branch Chief Claudia Borchert was asked whether, after a week of rebuttal and cross-examination, she still had confidence in the final version of the regulations that she and the NMED rulemaking team had developed. Borchert said she was confident, citing her team as the primary reason: “I have a stellar team, and I think we really complement each other” (Tr. Vol. XIII, 4387:15-4388:1). She went on to state: “We’ve had, between the four years of trying to get it passed in the Legislature, and the 18-plus months of actually digging down and trying to understand it and all the conversations that have happened, it just means that the product, 113, NMED Exhibit 113, the rebuttal rule, has just gone through the ringer so many times that I do feel confident in it” (Tr. Vol. XIII, 4389:3-12).

The rule approved by the board includes multiple favorable provisions that expand the borders for clean fuel production, including:

• Book-and-claim provisions for renewable electricity and renewable natural gas that will enable clean fuel producers to achieve lower carbon intensity through the acquisition of low-CI process energy and heat

• A broad synthetic fuel definition and opportunities for synthetic fuels to opt in to the program

• Recognition of avoided methane emissions in pathway scores

• Favorable sustainable aviation fuel crediting based on a fixed carbon intensity (CI) benchmark score for alternative jet fuel that will enable 10 CI points more credit than diesel in 2030 and 20 CI points more in 2040, along with fueling supply equipment crediting for AJF

Unfortunately for the biomass power industry, the New Mexico CTFP regulations define “renewable electricity” to include only electricity generated by solar, wind, hydropower or geothermal generation. Under Section 206(E) of the regulations, qualifying renewable electricity sources have a zero carbon intensity score. Offsite renewable electricity sourcing can be done via the purchase of renewable energy certificates, typically referred to as RECs, that represent the carbon intensity of the power. In other clean fuel programs, this type of power sourcing is generally restricted to electricity used to charge electric vehicles. The New Mexico CTFP is the first clean fuel program to expand this power sourcing via RECs to liquid fuel production facilities that produce ethanol, biodiesel, renewable diesel or other qualifying low-carbon fuels.

As a strong supporter of clean fuel programs, it has been a privilege to participate in the establishment and development of the New Mexico CTFP. To my knowledge, the very first stakeholder to advance the concept of a clean fuel program for New Mexico was Virginia Smith of Adelante Consulting. Adelante had done analysis for a county in New Mexico to identify a policy that would create a market for the woody biomass generated by wildfire risk reduction treatments. Based on that analysis, Adelante determined that a clean fuel program would be the most advantageous policy structure to create market demand for biomass. Smith reached out to the Low Carbon Fuels Coalition in 2020 to request our help in getting a bill introduced. I am proud to report that the LCFC rose to that challenge and worked for five years to support its passage, with success finally being achieved by Executive Director Robin Vercruse and Chair Lindsay Fitzgerald in 2024.

The program’s adoption marks a significant expansion of clean fuel policy beyond coastal markets, and underscores the growing role of interior states in shaping the future of low-carbon fuel development READ MORE