Maintaining momentum: Clean energy progress in New Mexico’s 2026 legislative session

Despite the constraints of a short, budget‑focused calendar, New Mexico’s 2026 legislative session still delivered meaningful progress on clean energy, environmental protection, and workforce development. Rather than deferring to next year’s 60‑day session, state leaders used this moment to advance targeted investments and tackle long‑standing challenges at a time when similar policies at the federal and international levels are hitting headwinds.

For Clean Air Task Force (CATF), the session reinforced why New Mexico remains a critical place to engage. The state sits at the intersection of energy abundance, scientific expertise, and climate urgency. With major energy resources, world‑class research institutions, and communities and leaders seeking cleaner air and affordable, reliable power, New Mexico continues to serve as a proving ground for pragmatic climate solutions that can scale both nationally and globally.

Major legislative wins

CATF supported a slate of bills that reflected many of our priorities, legislation to advance industrial innovation, methane reductions, fusion, geothermal, and advanced nuclear energy. Though not all of them passed this year, the ones that did included:

• Advanced Energy Product Definition (HB 154): Updates the Advanced Energy Equipment Tax Credit by removing reliance on federal tax credits and defining a state‑specific list of qualifying advanced energy products, including solar, wind, batteries, fusion, and critical minerals. Existing credit structure was preserved while clarifying eligibility to ensure continued support for manufacturing, investment, and job creation amid potential federal policy changes. Interest in fusion energy development helped drive the bill, with CATF serving as a central stakeholder after sharing our 2025 report ahead of the session, “State Policy Options for Fusion Energy Deployment.”
• Payment of Certain IRB Special Assessments (HB 165): Commonly known as the C‑PACE (Commercial Property Assessed Clean Energy financing) bill, this measure was part of the state’s incentive package supporting Pacific Fusion’s $1 billion investment announced in fall 2025. Its passage helps solidify that investment and signals that New Mexico is actively modernizing its clean energy incentives to attract additional industry interest.
• Oil & Gas Conservation Tax Act Changes (HB 80): Increases and phases in the share of conservation tax revenues dedicated to the oil and gas reclamation fund, ultimately directing up to 100% of receipts for a defined period to plug abandoned wells and restore impacted sites. The bill makes the fund nonreverting, limits its use to reclamation, and shifts administration to the Energy, Minerals and Natural Resources Department (EMNRD). CATF joined a broad, bipartisan coalition in support.

In one unfortunate situation, the legislature passed a bill that was then vetoed by the Governor. The Low-Carbon Construction Material Rebate Act (HB 153), would have established grant and rebate programs to offset capital investments and incentivize the purchase of low‑carbon construction materials verified through environmental product declarations. The bill required emissions baselines and benchmarks, caps rebates per project and statewide, and creates a dedicated fund to reduce embodied carbon in construction. CATF contributed to early bill drafts, aligning it with our State Industrial Policy Playbook, and engaged legislators at critical moments to help secure final passage. While it is disappointing that it won’t be enacted this year, we were encouraged to see the bill receive bipartisan votes and we are committed to working on it again next year. According to her official statement on this decision, Governor Lujan Grisham indicated that she hoped the bill would be more “agile and adaptive.”

Other bills that CATF supported that didn’t pass this session included:

• HB 62/SB 163, which would have expanded and restructured geothermal electricity tax credits, increased credit caps, enabled limited transfers, and included set‑asides for tribal and small businesses. Though this would have been a step forward for geothermal policy if it had passed, the legislature still provided funding for the existing program through appropriations, and now we have an opportunity to think more broadly about policies that could help the industry beyond just funding and incentives next year.
• SB 78, which would have classified nuclear energy as a renewable resource for Renewable Portfolio Standard compliance, including both fission and fusion facilities. On the surface, it seems like a stretch to designate nuclear as a renewable resource. But the way New Mexico’s clean electricity standard (CES) is designed pegs it to the state’s renewable portfolio standard (RPS), so we believed this was a pragmatic way to signal the state’s openness to nuclear energy to meet its climate goals. There are other technologies that qualify for the state’s RPS that could be argued are not completely renewable as well, so the state definition is already a bit subjective. We look forward to working with the bill sponsors during the interim to explore other angles for next year.
• HB 27, which proposed expanding the Technology Jobs Research and Development Tax Credit to attract and retain high‑skilled, technology‑based businesses, including in the clean energy sector. Unfortunately, this bill did not make it into a broader tax package, but it now provides an opportunity to revisit the issue in 2027.

Budget investments and noteworthy outcomes

The General Appropriation Act of 2026 (HB 2) also included several line items supporting CATF priorities, including funding for geothermal projects, grid modernization, non‑extractive energy workforce development, industrial decarbonization, emissions data systems modernization, and loans for local clean energy projects.

One of the most encouraging outcomes was the legislature’s emphasis on implementation and system resilience. Lawmakers allocated $10 million to the geothermal projects development fund, supporting a clean, firm energy resource that complements wind and solar while strengthening grid reliability. An additional $10 million went to the grid modernization grant fund, alongside investments to help workers in extractive industries transition to non‑extractive careers. Together, these investments help build a more resilient electric system capable of integrating diverse resources and protecting communities from outages and extreme weather.

Equitable access to clean energy also featured prominently. A $5 million allocation will provide low‑interest loans to accelerate deployment of emissions‑reducing technologies such as wind, solar, weatherization, and geothermal energy, with priority for underserved and low‑income communities. Requiring applicants to demonstrate clear benefits like reduced emissions or utility costs helps ensure public investments deliver real returns.

Recognizing that climate progress depends on people as much as infrastructure, lawmakers also invested in workforce development and data modernization. Funding for circular‑economy and industrial decarbonization initiatives supports innovation beyond the power sector, while new investments at the University of New Mexico will improve integration of air quality, groundwater, methane, and carbon emissions data.

Looking beyond New Mexico’s borders

Taken together, the outcomes of the 2026 session reflect a clear understanding of what effective climate policy requires: practical solutions, sustained investment, technological innovation, and bipartisan cooperation. New Mexico’s leadership increasingly extends beyond state lines. As other states and international partners seek credible examples of how to align climate ambition with economic opportunity, New Mexico stands out for its focus on execution.

CATF looks forward to continuing our work with state leaders, agencies, and partners as New Mexico builds on this momentum.