New Mexico’s landmark coal transition law faces an uncertain timeline

This story is co-published with the Vitality Information Community, a nonprofit information group that covers the nation’s transition to scrub vitality. 

New Mexico was on monitor to turn into a mannequin for phasing out coal energy with out abandoning those that have labored, lived or breathed below its smokestacks.

The state’s largest utility had already introduced plans to divest from coal. A brand new state legislation would maintain it to that pledge whereas additionally offering hundreds of thousands of {dollars} in funding for employees and affected communities.

“It is a actually large deal,” Gov. Michelle Lujan Grisham stated on the invoice signing. “The Vitality Transition Act essentially modifications the dynamic in New Mexico.”

The 2019 legislation has withstood political and authorized challenges, however three years later it nonetheless faces a serious check. Ongoing drought, provide chain points and rising pure gasoline costs threaten to complicate or delay its rollout by prolonging the lifetime of the state’s largest and most polluting coal-fired energy plant.

Advocates for a so-called simply transition from fossil fuels are assured the laws will ultimately obtain its objectives, however they might nonetheless face months or years extra uncertainty about its timeline and implementation.

Early momentum

Lujan Grisham was elected in 2018 as a part of a cohort of “Inexperienced New Deal” Democrats elected throughout the nation. As quickly as her time period started, she and fellow Democrats within the statehouse, with the backing of state and regional environmental teams, got down to craft a kind of miniature Inexperienced New Deal, reviving laws that beforehand had perished. 

Momentum was on their aspect. The state’s largest utility, Public Service Firm of New Mexico, referred to as PNM, had already stated in 2017 that it was washing its fingers of coal energy and would shut down its San Juan Producing Station in June 2022. Quickly thereafter, Arizona Public Service indicated it will shut down the 4 Corners Energy Plant, simply eight miles from the San Juan plant, in 2031.

The 2 amenities — initially having a mixed nameplate capability of greater than 3,000 megawatts — had been amongst half a dozen giant coal crops constructed on the comparatively sparsely populated Colorado Plateau throughout the Nineteen Sixties and ‘70s to quench burgeoning starvation for electrical energy within the Southwest. The smokestacks have spewed hundreds of tons of dangerous particulates, together with the potent neurotoxin mercury, into close by, predominantly Navajo, communities, whereas transport almost all the energy to far-off cities.

The Vitality Transition Act goals to deal with each the air pollution and injustice. The legislation mandates that New Mexico electrical energy suppliers get 80% of their energy from renewable sources by 2040, and 100% from carbon-free sources by 2045 — bold objectives for a state that at present will get half its electrical energy from coal and a 3rd from pure gasoline.

It permits a utility to take out “vitality transition bonds” to cowl prices related to coal plant abandonment. That features as much as $30 million for coal mine reclamation, and as much as $40 million to assist displaced employees and affected communities, to be shared by the Vitality Transition Indian Affairs Fund, Financial Growth Help Fund and Displaced Employee Help Fund.

Whereas the funds don’t match the estimated $100 million or extra in financial impression from the closure, “it’s a very good first step and offers us one thing for the 4 Corners communities to construct on,” stated Robyn Jackson, interim government director of Diné CARE, an environmental group that has held the crops’ house owners to account for 4 a long time.

Farmington’s Republican state lawmakers, Rep. Rod Montoya and Sen. William Sharer, ardently labored to kill the invoice, transition funds and all. Earlier than its passage, they tried to require PNM to maintain working the San Juan plant 5 years longer than deliberate. And, in live performance with fossil gasoline advocacy teams equivalent to Energy the Future, a nationwide group calling itself “the voice of vitality employees advocating for his or her jobs and communities, and pushing again on the novel environmental motion,” they’ve continued to assault it ever since, despite the fact that the act was a response to the plant’s closure, not its trigger. In February, Montoya co-sponsored a invoice that may have prolonged the lifetime of the San Juan plant and included pure gasoline crops below state clear energy sources. It didn’t move. 

Opposition has additionally come from an surprising place: New Vitality Economic system, a Santa Fe clear vitality group that has additionally been PNM’s most outspoken adversary on various points. New Vitality has stated it helps the mandates to decarbonize however it isn’t eager on the truth that PNM’s ratepayers, not shareholders, finally would pay for the abandonment and simply transition funds by means of the bonds. It argued in a 2019 court docket problem that the act unconstitutionally took away state regulators’ oversight of monopoly electrical utilities.

In January, New Mexico’s Supreme Court docket rejected New Vitality’s problem and affirmed the Public Regulation Fee’s choices concerning abandonment and securitization. The ruling ended the authorized battle over the act and cleared the best way for the closure of the coal plant and the transition to scrub vitality.

Coal plant’s revival

However a number of elements have collided over the past yr that might complicate and delay — maybe for years — the transition from fossil fuels. 

The summer time of 2021 was brutally scorching and dry throughout the West, dealing a one-two punch to the ability grid as drought depleted hydropower provides and the warmth elevated electrical energy demand. With a excessive probability of a repeat this yr, and with photo voltaic initiatives delayed by a federal probe into Asian photo voltaic imports and pandemic-related provide chain constraints, PNM opted to maintain one in every of two San Juan plant models working by means of September, three months previous the scheduled retirement date. 

In the meantime, a just about unknown firm emerged to purchase the ability crops with plans to put in carbon seize gear. Enchant Vitality now has extra time to get its regulatory geese in a row and to promote energy from the plant — which has turn into extra cost-competitive resulting from excessive pure gasoline costs. Enchant’s plant takeover is something however a executed deal, but when it had been to transpire, and the plant had been to proceed working, it may have an effect on the implementation of the Vitality Transition Act. 

Enchant Vitality CEO Cindy Crane stated conserving the plant open would protect high-wage jobs on the plant and mine, about 40% of that are held by Navajo employees, whereas additionally including a whole lot of union development jobs to construct the carbon seize gear. It additionally would give native officers extra time to organize for the demise of the coal trade and the financial transition it necessitates. 

PNM says it would abandon the plant later this yr, no matter what occurs with Enchant, and can then pay the transition funds to the state. However supply of a portion of these funds to the affected communities may very well be delayed by inconsistent language within the act, stated Cydney Beadles, New Mexico clear vitality program supervisor for Western Useful resource Advocates Beadles, who beforehand was the authorized division director on the New Mexico Public Regulation Fee.

The act treats “shut” and “abandon” synonymously, indicating that the authors didn’t account for a situation by which the plant continued to run after abandonment. The act doesn’t specify how the funds are distributed if the plant continues operations and employees will not be displaced after PNM’s abandonment, that means the legislature most likely must step in and determine. 

In the meantime, PNM additionally was making a transfer that might lengthen the lifetime of the 4 Corners Energy Plant past APS’s 2031 exit. It proposed not simply to divest from the plant, however to pay the tribe-owned Navajo Transitional Vitality Firm $75 million for it to take over PNM’s 13% share. Helmed by coal trade veterans, the corporate owns a trio of big coal mines within the Powder River Basin. 

Extra considerably, in 2013 it bought the Navajo Mine, which feeds the 4 Corners plant, that means the corporate “has a self-serving curiosity to maintain the plant working so long as doable,” in line with Tó Nizhóní Ání’s Nicole Horseherder, the chief of the trouble to get a simply transition on the Navajo Producing Station. “And the longer that coal-generated capability is a part of the vitality combine, the longer the delay in producing the financial advantages of transitioning to low-cost renewable vitality.”

Much more egregious to the environmental neighborhood was that PNM proposed paying for its abandonment of 4 Corners with Vitality Transition Act bonds, despite the fact that it will be transferring its possession. In different phrases, the utility needed to delay and even derail its transition from coal utilizing a legislation supposed to expedite that very same transition. State regulators rejected PNM’s proposal in December, however the utility has appealed. 

“The longer that coal-generated capability is a part of the vitality combine, the longer the delay in producing the financial advantages of transitioning to low-cost renewable vitality.”

In the meantime, a proposal to a committee vetting funding requests for the simply transition funds may divert a refund towards the fossil gasoline trade. 

The “consolidated proposal” by San Juan Faculty consists of pitches for a photo voltaic charging station manufacturing facility, a pumped hydropower vitality storage facility, a medical waste incinerator and a retail enterprise park within the Navajo neighborhood of Shiprock. But it surely additionally consists of proposals to supply hydrogen utilizing the world’s ample pure gasoline. And a plan for a “inexperienced certification” program that may practice college students to have the ability to supply third-party inexperienced certification to grease and gasoline corporations. Whereas the top objective is to make oil and gasoline manufacturing much less carbon-intensive, this kind of certification can be a type of greenwashing, in line with many environmentalists, that perpetuates the fossil gasoline economic system. 

San Juan Faculty’s accomplice on this endeavor is Western States and Tribal Nations, a corporation devoted to opening up international markets to pure gasoline from the Inside West by supporting the development of an LNG export terminal in Mexico. The group’s chairperson is Jason Sandel, the chief vice-president of Aztec Nicely, a family-owned oilfield providers firm based mostly within the San Juan Basin and a giant hydrogen hub booster. He additionally helms the Vitality Transition Act advisory committee, that means he’ll be concerned in vetting the proposals for funding. 

Members of the environmental neighborhood say the Vitality Transition Act has confirmed sturdy and can proceed to do what it was meant to do because the coal economic system fades. 

“Coal is dying as a result of it’s costly and harmful, and renewables are low cost and secure, and they’re what we have to forestall the unthinkable,” stated Camilla Feibelman, director of the Sierra Membership’s Rio Grande chapter. “A altering economic system, the impacts regionally of polluting industries, and the worldwide impacts of local weather change are profoundly tough for everybody concerned, but when we work collectively as an built-in neighborhood to search out options we might get there.”

Jonathan Thompson is a contributing editor at Excessive Nation Information. He’s the creator of Sagebrush Empire: How a Distant Utah County Grew to become the Battlefront of American Public Lands. Electronic mail him at [email protected] or submit a letter to the editor. See our letters to the editor coverage.

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