LOW-CARBON CONSTRUCTION MATERIAL REBATE ACT

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AN ACT
RELATING TO THE ENVIRONMENT; ENACTING THE LOW-CARBON
CONSTRUCTION MATERIAL REBATE ACT; ENACTING THE ENVIRONMENTAL
PRODUCT DECLARATION ACT; ENACTING THE INDUSTRIAL CARBON
REDUCTION ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. SHORT TITLE.--Sections 1 through 9 of this
act may be cited as the "Low-Carbon Construction Material
Rebate Act".
SECTION 2. DEFINITIONS.--As used in the Low-Carbon
Construction Material Rebate Act:
A. "covered construction materials" means
materials used in a construction project, including cement,
concrete, asphalt binder, asphalt mixtures, aluminum, steel,
glass, roofing material, insulation material, engineered wood
and precast concrete;
B. "department" means the department of
environment;
C. "emissions baseline" means a calculation of the
industry-average greenhouse gas emissions associated with a
material;
D. "emissions benchmark" means the maximum
acceptable amount of greenhouse gas emissions associated with
a category of covered construction materials eligible for the
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rebate;
E. "environmental product declaration" means a
declaration that is independently verified and provides a
life-cycle assessment of a product's global warming potential
and facilitates a comparison of environmental impacts between
products;
F. "global warming potential" means the quantity
of greenhouse gas emissions associated with a product
expressed in terms of carbon dioxide equivalent;
G. "low-carbon construction material" means a
covered construction material with a global warming potential
at or below the emissions benchmark established by the
department;
H. "material buyer" means a person purchasing low-
carbon construction material and using that material for
construction;
I. "material supplier" means a manufacturer,
producer or distributor of covered construction materials;
J. "program" means the low-carbon construction
material rebate program;
K. "project" means a construction project
involving more than one residential unit or more than five
thousand square feet of nonresidential floor area; and
L. "rebate" means a payment to a material buyer to
offset a portion of the cost of a qualifying purchase.
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SECTION 3. ENVIRONMENTAL PRODUCT DECLARATIONS--
REQUIREMENTS.--An environmental product declaration shall:
A. be product- or facility-specific, unless the
department determines that only industry-average
environmental product declarations are available for a
particular covered material;
B. be independently verified;
C. facilitate a comparison of environmental
impacts between products fulfilling the same function;
D. meet or exceed internationally recognized
standards for environmental product declarations;
E. have been issued within five years of the date
submitted to the department; and
F. include:
(1) a life-cycle assessment of a product's
global warming potential;
(2) the manufacturing facility's location;
(3) the scope of life-cycle analysis;
(4) the date of issuance;
(5) the product's specifications and
performance characteristics; and
(6) additional information the department
deems necessary.
SECTION 4. LOW-CARBON CONSTRUCTION MATERIAL REBATE
PROGRAM ESTABLISHED.--
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A. The department shall establish and administer a
"low-carbon construction material rebate program" to provide
financial incentives to material buyers who purchase
low-carbon construction material.
B. Subject to appropriation, the program shall
provide rebates for low-carbon construction material
purchased by a material buyer subject to the requirements and
limits established in the Low-Carbon Construction Material
Rebate Act.
C. By no later than January 1, 2027, the
department shall promulgate rules to implement the program;
provided that the department shall not promulgate any rules
that require the use of a low-carbon construction material
that has received a verified environmental product
declaration. Promulgated rules shall include:
(1) application procedures and required
documentation;
(2) verification and audit requirements;
(3) procedures for establishing and updating
emissions baselines, emissions benchmarks and rebate amounts;
(4) requirements for environmental product
declarations; and
(5) antifraud and enforcement provisions.
SECTION 5. EMISSIONS BASELINES AND BENCHMARKS.--
A. The department shall establish emissions
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baselines for conventionally produced covered construction
materials. Emissions baselines shall be based on regional
industry-average emissions data, or the best available data
source as determined by the department, and shall be updated
every three years.
B. Emissions benchmarks adopted by the department
may be fifteen percent lower than the emissions baseline for
each material.
C. The department shall review and may adjust
emissions baselines and emissions benchmarks every three
years to reduce emissions levels over time.
SECTION 6. REBATE STRUCTURE--LIMITS.--
A. Material buyers shall be eligible for rebates
for low-carbon construction material, subject to the
following limits:
(1) a maximum rebate of five hundred
thousand dollars ($500,000) per project; and
(2) a maximum rebate of ten million dollars
($10,000,000) statewide per fiscal year.
B. The department shall prioritize distribution of
rebates based on:
(1) greatest emissions reductions relative
to the emissions baseline for an equivalent conventionally
produced material per dollar of rebate;
(2) greatest emissions reductions relative
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to the emissions baseline for an equivalent conventionally
produced material per unit of material;
(3) material produced by New Mexico-based
manufacturers;
(4) greatest value to the state; and
(5) other criteria as determined by the
department.
SECTION 7. VERIFICATION AND CERTIFICATION
REQUIREMENTS.--
A. To receive a rebate, a material buyer shall
submit:
(1) an environmental product declaration for
the low-carbon construction material;
(2) evidence of the price paid for the low-
carbon construction material and the person that paid the
price; and
(3) any additional documentation required by
the department.
B. The department may conduct audits and
inspections to verify compliance with program requirements
and may require additional documentation or testing.
SECTION 8. REPORTING.--
A. The department shall submit an annual report to
the governor and the appropriate interim legislative
committee by October 1 of each year detailing:
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(1) the number and value of rebates issued;
(2) types and quantities of low-carbon
construction material used by rebate recipients;
(3) estimated greenhouse gas emissions
reductions achieved;
(4) market availability and pricing trends
for low-carbon construction material; and
(5) program effectiveness and
recommendations for improvements.
B. The department shall make rebate awards and
program data publicly available on its website.
SECTION 9. ANTIFRAUD PROVISIONS.--
A. A material buyer or material supplier who
knowingly submits false information or fraudulent
documentation to obtain rebates under the Low-Carbon
Construction Material Rebate Act is guilty of a fourth degree
felony pursuant to Section 31-18-15 NMSA 1978 and shall be:
(1) permanently disqualified from
participating in the program;
(2) required to repay all rebates received
through fraud; and
(3) subject to debarment from state
procurement.
B. The department shall establish procedures for
investigating suspected fraud and shall cooperate with law
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enforcement authorities in prosecution of a claim of fraud.
SECTION 10. SHORT TITLE.--Sections 10 through 13 of
this act may be cited as the "Environmental Product
Declaration Act".
SECTION 11. DEFINITIONS.--As used in the Environmental
Product Declaration Act:
A. "covered material" includes:
(1) concrete and concrete mixtures,
including ready-mix concrete, shotcrete, precast concrete and
concrete masonry units;
(2) cement;
(3) asphalt binder and asphalt mixtures;
(4) steel;
(5) glass;
(6) roofing materials;
(7) insulation materials;
(8) engineered wood; and
(9) aluminum;
B. "department" means the department of
environment;
C. "embodied carbon" means the greenhouse gas
emissions generated by the manufacturing, transportation,
installation, maintenance and disposal of covered materials
used in buildings, roads and other infrastructure;
D. "environmental product declaration" means a
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declaration that is independently verified, provides a life-
cycle assessment of a product's global warming potential and
facilitates a comparison of environmental impacts between
products fulfilling the same function; and
E. "global warming potential" means the quantity
of greenhouse gas emissions associated with a product
expressed as the carbon dioxide equivalent.
SECTION 12. ENVIRONMENTAL PRODUCT DECLARATION PROGRAM--
CREATED--AUTHORITY--POWERS AND DUTIES.--
A. The "environmental product declaration program"
is created in the department to enable the department to:
(1) assist manufacturers of covered
materials with the creation of environmental product
declarations that shall be shared with the department;
(2) receive and analyze data associated with
a manufacturer's environmental product declarations; and
(3) research options for reducing embodied
carbon in state construction projects.
B. The department shall administer the program.
C. The department may contract for services to
assist manufacturers of covered materials with the creation
of environmental product declarations that shall be shared
with the department.
D. On or before January 1, 2027, the department
shall promulgate rules to implement the Environmental Product
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Declaration Act, including rules on environmental product
declaration verification and auditing procedures and on
reporting requirements and formats. The department shall not
promulgate any rules that require the use of a covered
material that has received a verified environmental product
declaration.
E. No later than October 1, 2027 and October 1
every year thereafter, the department shall publish a report
that includes:
(1) the number of environmental product
declarations provided to the department, organized by type of
covered material;
(2) the geographic distribution of
manufacturing facilities;
(3) an assessment of the number of
businesses within the state that manufacture covered
materials and are equipped to issue environmental product
declarations;
(4) an assessment of the progress made in
creating environmental product declarations for covered
materials;
(5) recommendations for reducing embodied
carbon in state construction projects; and
(6) recommendations for program
improvements.
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SECTION 13. ENVIRONMENTAL PRODUCT DECLARATIONS--
REQUIREMENTS.--An environmental product declaration shall:
A. be product- or facility-specific, unless the
department determines that only industry-average
environmental product declarations are available for a
particular covered material;
B. be independently verified;
C. facilitate a comparison of environmental
impacts between products fulfilling the same function;
D. meet or exceed internationally recognized
standards for environmental product declarations;
E. have been issued within five years of the date
submitted to the department; and
F. include:
(1) a life-cycle assessment of a product's
global warming potential;
(2) the manufacturing facility's location;
(3) the scope of life-cycle analysis;
(4) the date of issuance;
(5) the name and credentials of the
independent verifier;
(6) the product's specifications and
performance characteristics; and
(7) additional information the department
deems necessary.
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SECTION 14. SHORT TITLE.--Sections 14 through 21 of
this act may be cited as the "Industrial Carbon Reduction
Act".
SECTION 15. DEFINITIONS.--As used in the Industrial
Carbon Reduction Act:
A. "carbon intensity" means the quantity of carbon
dioxide emitted during the production of one ton of an
eligible product, including direct scope one emissions and
indirect scope two emissions;
B. "certification of eligibility" means the
certification provided by the department that qualifies an
eligible entity to be awarded a production incentive or an
investment grant;
C. "department" means the economic development
department;
D. "eligible entity" means a person that owns or
operates a qualified industrial facility in New Mexico;
E. "eligible product" means concrete, cement,
asphalt, iron, steel, glass, hydrogen, ammonia, methanol,
ethylene, aluminum, pulp, paper, critical minerals,
engineered wood products, other biomass-related industrial
products or other industrial products as determined by the
department of environment that are produced in New Mexico;
F. "eligibility threshold" means a carbon
intensity that is forty percent below the industry benchmark
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in a given year to be eligible for a production incentive or
investment grant award;
G. "environmental product declaration" means the
independently verified declaration that provides a life-cycle
assessment of a product's carbon intensity;
H. "grant" means a monetary payment to an eligible
entity to offset the cost of qualified expenditures made for
a qualified industrial facility that results in the reduction
of carbon intensity of at least forty percent below the
industry benchmark for the eligible product being
manufactured or refined in the facility;
I. "incentive" means a per-ton subsidy made to an
eligible entity that reduces carbon intensity in the
production of eligible products by the eligibility threshold
or more;
J. "industry benchmark" means the industry-wide
average carbon intensity for a given eligible product;
K. "qualified expenditure" means a capital
expenditure made on or after January 1, 2026 and prior to
January 1, 2039 that is dedicated to and necessary for
producing an eligible product in a manner that reduces the
product's carbon intensity by at least forty percent below
the industry benchmark;
L. "qualified industrial facility" means a
facility located in New Mexico that is used to manufacture or
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refine an eligible product;
M. "refine" means a chemical or physical process
to remove impurities from a substance or material;
N. "scope one emissions" means direct greenhouse
gas emissions from sources that are owned or controlled by
the eligible entity;
O. "scope two emissions" means indirect greenhouse
gas emissions associated with the purchase of electricity,
steam, heat or cooling;
P. "scope three emissions" means indirect
greenhouse gas emissions, excluding scope two emissions; and
Q. "ton" means a metric ton.
SECTION 16. CARBON REDUCTION PRODUCTION INCENTIVE
PROGRAM--DEPARTMENT DUTIES--INDUSTRY BENCHMARK--CARBON
REDUCTION ACHIEVEMENTS--CALCULATIONS BY DEPARTMENT OF
ENVIRONMENT.--
A. The "carbon reduction production incentive
program" is created in the department. The program provides
incentives to New Mexico industries that meet or exceed the
eligibility threshold as provided in this section.
B. Prior to January 1, 2039, an eligible entity
that proposes to produce an eligible product with a carbon
intensity that meets or exceeds the eligibility threshold may
be eligible for a carbon reduction production incentive.
C. Incentives shall be granted to eligible
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entities that produce eligible products, which production
results in meeting or exceeding the eligibility threshold for
each product produced. The incentive is equal to eighty-five
dollars ($85.00) per ton of carbon dioxide reduced below the
industry benchmark; provided that the facility meets the
eligibility threshold as determined by the department of
environment. Eligible products for which the state has
granted an incentive shall be sold by the eligible entity to
an unrelated person or used by the eligible entity to produce
a related product.
D. Only new, incremental carbon reductions are
eligible for incentives; provided that the reductions are
below the industry benchmark; and provided further that the
facility meets the eligibility threshold.
E. The department shall promulgate rules based on
the eligibility threshold set by the department of
environment. The department shall open the first application
period within eighteen months of the effective date of this
2026 act. The first application period may apply to a
limited subset of the eligible products listed in the rules
of the department promulgated in accordance with the
Industrial Carbon Reduction Act, in consultation with the
department of environment.
F. An eligible entity shall apply for a
certification of eligibility on forms and in the manner
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prescribed by the department. At a minimum, the application
shall include:
(1) eligible products for which the
certification is being sought;
(2) estimates of the carbon intensity of
those products and the carbon reductions that will be
achieved for each year of the certification;
(3) estimates of the volume of production by
ton for each eligible product each year;
(4) an estimate of the year when production
of each eligible product will begin; and
(5) any other information required by the
department or requested by the department of environment.
G. The department shall keep application periods
open for a minimum of four months. After the close of a
given application period, the department, in consultation
with the department of environment, shall select applications
submitted during that period to be awarded certifications of
eligibility.
H. In awarding certifications of eligibility, the
department, in consultation with the department of
environment, shall prioritize applications that:
(1) represent projects with the highest
likelihood of success, including consideration of technical
feasibility and relevant financial details pertaining to the
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eligible entity;
(2) are likely to minimize other
environmental pollution, including air and water pollution;
and
(3) support favorable economic growth in New
Mexico, including growth of high-quality employment
opportunities for New Mexico residents.
I. The department shall issue certifications of
eligibility through December 31, 2036. The certifications
shall be issued for a term of not less than ten years unless
an applicant requests a shorter term. Certifications of
eligibility shall not extend beyond December 31, 2038.
J. In awarding certifications of eligibility, the
department shall state the aggregate incentive amount to
which the eligible entity is entitled over the term of the
certification of eligibility. In calculating the aggregate
amount for a certification of eligibility, the department
shall consider:
(1) estimates submitted by the eligible
entity;
(2) how best to allocate available money;
and
(3) other criteria as determined by
standards set by the department of environment.
K. The department shall not issue certifications
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of eligibility in a total amount that exceeds available
money.
L. An eligible entity that is claiming an
incentive for a given year shall report to the department:
(1) the total number of tons of the eligible
product produced in the given year; and
(2) the carbon intensity of the eligible
product, as an annual average for that year, and as
determined by the production processes used to produce the
product in that year.
M. The department of environment shall calculate
the net ton carbon intensity reduction available for the
incentive and calculate the value of the incentive, which
shall be paid at the end of the calendar year. The
department of environment shall reset the industry benchmark
every five years.
N. The department shall publish on the
department's website on a regular basis the:
(1) dollar value of the certifications of
eligibility issued each year;
(2) dollar value of each incentive granted
in each calendar year; and
(3) remaining capacity for the issuance of
certifications of eligibility.
SECTION 17. DEPARTMENT OF ENVIRONMENT--RULEMAKING--
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DATA--INDUSTRY BENCHMARK CALCULATIONS.--
A. In addition to other rules required pursuant to
the Industrial Carbon Reduction Act, the department of
environment shall promulgate rules within twelve months of
the effective date of that act that include methodologies for
determining carbon intensity of eligible products, which:
(1) shall include scope one emissions and
scope two emissions;
(2) shall be established in such a way that
allows for accurate and consistent comparison between
industry benchmarks and carbon intensity estimates provided
by an eligible entity applying for certification of
eligibility or an incentive;
(3) may include scope three emissions and
use environmental product declarations for eligible products
if the declarations are available and in common use in more
accurately measuring industry benchmarks for eligible
products; and
(4) shall include procedures for
determining:
(a) the carbon intensity of products
made at facilities that commenced operations prior to January
1, 2026;
(b) the carbon intensity of products
made at facilities that commence operations on or after
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January 1, 2026; and
(c) industry benchmarks.
B. Using the methodologies determined in
accordance with Subsection A of this section and data from
the three to five most recent years for which data are
available, the department of environment shall calculate the
industry benchmark for all eligible products within two years
of the effective date of the Industrial Carbon Reduction Act.
SECTION 18. DEPARTMENT--RULEMAKING.--In addition to
other rules required pursuant to the Industrial Carbon
Reduction Act, the department shall promulgate rules within
twelve months of the effective date of that act to include:
A. all requirements necessary for an eligible
entity to submit a complete application; and
B. practices and procedures to ensure compliance
by eligible entities with statutory and rule requirements.
SECTION 19. CARBON REDUCTION INVESTMENT GRANT
PROGRAM.--
A. The "carbon reduction investment grant program"
is created in the department. The program provides grants to
eligible entities to offset capital investments in qualified
facilities located in New Mexico.
B. Prior to January 1, 2039, an eligible entity
that makes qualified expenditures for a new or renovated
qualified industrial facility may be eligible for a carbon
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reduction investment grant from the department. The grant
shall be ten percent of the cost of qualified expenditures
made by the eligible entity, up to a maximum of five million
dollars ($5,000,000).
C. The department shall promulgate rules based on
the eligibility threshold set by the department of
environment. The process shall include application periods.
D. The department shall open the first application
period within eighteen months of the effective date of the
Industrial Carbon Reduction Act. The first application
period may apply to a limited subset of eligible products.
The department shall keep applications open for at least four
months.
E. An eligible entity that seeks a grant shall
include all information required by rule of the department,
including:
(1) estimates of the carbon intensity of the
eligible products manufactured or refined in the facility for
which a grant is being sought;
(2) estimates of the volume of production by
ton for each eligible product, with production estimates for
at least ten years from the beginning of the production made
possible by the qualified expenditure; and
(3) an estimate of the year in which the
qualified industrial facility will begin production of the
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eligible product.
F. After the close of an application period, the
department shall prioritize applications that:
(1) are estimated to achieve the greatest
carbon intensity reduction;
(2) represent projects with the highest
likelihood of success, including consideration of technical
feasibility and relevant financial details pertaining to the
eligible entity;
(3) are likely to minimize other
environmental pollution, including air and water pollution;
and
(4) support favorable economic growth in the
state, including growth of high-quality employment
opportunities for New Mexico residents.
G. The department shall publish on the
department's website on a regular basis:
(1) the dollar value of grants issued
pursuant to this section each year; and
(2) any remaining available grant funding.
H. The department shall include a clawback
provision in the department's contract with the eligible
entity that requires the eligible entity to repay the grant
in the event the eligible entity fails to meaningfully meet
the estimates set out in Subsection E of this section.
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SECTION 20. ELIGIBILITY FOR INCENTIVE.--An eligible
entity shall not be eligible to claim the carbon reduction
production incentive if the eligible entity claims in the
same taxable year for the same equipment or activity a
federal carbon dioxide sequestration tax credit pursuant to
Section 45Q of the federal Internal Revenue Code of 1986, as
that section may be amended or renumbered.
SECTION 21. REPORTS TO LEGISLATURE.--
A. The department and the department of
environment shall prepare an annual report on the
implementation of the Industrial Carbon Reduction Act. The
report shall include:
(1) the number and types of applications
received for each program;
(2) the number and total dollar value of
certifications of eligibility issued;
(3) total carbon intensity reductions
achieved by each program;
(4) economic impacts, including jobs created
or retained, by type and salary range;
(5) analysis of program effectiveness and
recommendations for improvements; and
(6) any other data or other information
deemed relevant by the department and the department of
environment.
HAFC/HENRC/HB 153
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B. The report shall be submitted to the interim
legislative committee that studies economic development and
rural policy and the legislative finance committee by October
1 of each year, with a copy of the report filed with the
legislative library.
SECTION 22. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2026.