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New Mexico's wild hydrogen days

New Mexico Gov. Michelle Lujan Grisham, center, tours the Star Scientific facility in Sydney, Australia.
Photo courtesy of the governor’s office
New Mexico Gov. Michelle Lujan Grisham, center, tours the Star Scientific facility in Sydney, Australia.

This story was originally published by Capital & Main, that story can be found here.

New Mexico Gov. Michelle Lujan Grisham flew to Australia earlier this month with an oil and gas lobbyist and the head of a natural gas industry group to speak at a hydrogen conference. The trip came after a week of whiplash hydrogen news in the state, with a panel recommending money for hydrogen projects, the federal government snubbing a New Mexico-led regional hydrogen hub proposal and a state agency releasing a rosy outlook for the carbon sequestration needed for hydrogen production.

Lujan Grisham’s office announced that she was leading a trade mission to Australia, culminating in the Asia-Pacific Hydrogen 2023 Summit in Sydney, just days before departure. A press release named nine others joining the governor, including a representative from Avangrid (which is trying to buy New Mexico’s largest public electric utility); the former chief commercial officer for BayoTech, an Albuquerque-based manufacturer of machines that turn natural gas into hydrogen; Jason Sandel, the head of an oil and gas well-servicing company in Farmington, New Mexico, chair of a natural gas industry group and a major political backer of Lujan Grisham; and Jennifer Bradfute, an oil and gas lobbyist and lawyer for years with Marathon Oil who recently joined ExxonMobil.

The summit helps attendees “access the latest industry advancements and sign new partnerships,” according to its website, and draws speakers from governments and companies around the world. Lujan Grisham spoke on a panel looking into regional collaboration and trade between Asia-Pacific and the rest of the world. The governor’s office later announced that Star Scientific, an Australian company, pledged to build a research and manufacturing facility in Albuquerque. The company makes a catalyst that gets extremely hot when exposed to hydrogen and can be used in high-heat industrial processes or power generation, according to the company. In a photo of the signing ceremony, the big-bearded Sandel stands behind the governor’s left shoulder.

Star Scientific Ltd. Global Group Chair Andrew Horvath signs a letter of intent alongside Gov. Michelle Lujan Grisham in Sydney, Australia on October 26.
Photo courtesy of the governor’s office.
Star Scientific Ltd. Global Group Chair Andrew Horvath signs a letter of intent alongside Gov. Michelle Lujan Grisham in Sydney, Australia on October 26.

Maddy Hayden, the governor’s director of communications, said organizers invited Lujan Grisham to speak and that state employee travel expenses are covered by the New Mexico Partnership, a public-private partnership under the state’s Economic Development Department. “The heavily global nature of the hydrogen economy necessitates building relationships outside of U.S. borders,” Hayden said. “Each business member of the delegation represents a company investing heavily in the clean hydrogen space in New Mexico, the U.S. and the globe.” The governor’s office did not share a copy of the Star Scientific agreement before publication.

A week before the trip, the White House and the Department of Energy rejected Lujan Grisham’s proposal for a collaborative hydrogen hub connecting New Mexico, Utah, Colorado and Wyoming. Energy trade between New Mexico and the Asia-Pacific region continues, though, with help from Lujan Grisham’s travel partner Sandel, who wears many hats, including chairman of Western States and Tribal Nations, a collaboration between the natural gas industry and tribal and government agencies from New Mexico, Utah, Colorado and Wyoming. The group wants a natural gas export route from the intermountain West to Asian markets, something it’s working on with energy giant Sempra.

According to New Mexico secretary of state records, fellow traveler Bradfute spent five years as a lobbyist at Marathon Oil before recently joining ExxonMobil as its Permian Basin representative. ExxonMobil, Avangrid and Sempra are all partners in the Houston-based HyVelocity Hub hydrogen proposal that received federal funding when Lujan Grisham’s intermountain plan didn’t.

The same day as the federal hydrogen hub announcements, Lujan Grisham kicked off the nonprofit New Mexico Climate Investment Center to centralize state applications for federal climate investment money. While addressing protesters who decried her hydrogen hopes, Lujan Grisham said that New Mexico has “all the right geology” for hydrogen development. That comment grew clearer later in the week when the New Mexico Bureau of Geology & Mineral Resources published its semi-annual newsletter, usually devoted to describing the state’s geology to the public. This time, it explained how the state’s geology could benefit hydrogen production and the economy.

“People are really desperate to feel like there’s a solution to climate change that doesn’t require us to change anything.”

~ Camilla Feibelman, director, Rio Grande chapter of the Sierra Club

The authors, one a senior petroleum geologist at the bureau and the other a research scientist at the Petroleum Recovery Research Center at New Mexico Tech, wrote, “Carbon sequestration and hydrogen production and storage are technologies that could contribute to a sustainable economy in New Mexico.”

To be carbon neutral, fossil fuel-based hydrogen requires expensive and massive sequestration projects where waste carbon dioxide is permanently injected into rock formations. The authors say New Mexico has favorable geology for injection but fail to say that the technology doesn’t work very well, either in the U.S. or elsewhere. Furthermore, the state’s sole industrial-scale carbon-capture project, Four Corners Carbon Capture, is still nearly two years away from receiving a permit from the Environmental Protection Agency. Yet the Intergovernmental Panel on Climate Change announced last year that carbon emissions globally need to stop rising by 2025, years before the Four Corners carbon capture facility could be permitted and built.

Nevertheless, the geologists report that carbon sequestration offers “potential for existing and recently closed power plants and adjacent coal mines to remain active,” despite the fact that the state’s coal plants and mines are closing under New Mexico’s Energy Transition Act (ETA) because that is the quickest, cheapest way to reduce their carbon emissions.

“People are really desperate to feel like there’s a solution to climate change that doesn’t require us to change anything,” said Camilla Feibelman, director of the Rio Grande chapter of the Sierra Club. With hydrogen, she said, “Oil and gas has found a new way to package its product and slap on the name ‘clean and green.’”

*   *   *

Hydrogen produces only electricity and water when it’s run through a fuel cell. That creates no climate-warming gases — one reason so many want to make it. Another reason is governments are offering millions — sometimes billions — to help pay to make it. A third reason is that it can be made from fossil fuels at a time when they appear to be on the way out.

Production is the big problem. New Mexico’s abundant natural gas can be processed into so-called “gray” or “blue” hydrogen. Both are energy intensive to make, and for every kilogram of natural gas used, the chemical process creates nearly three kilograms of climate-warming carbon dioxide waste — and that doesn’t include the carbon dioxide produced from powering the process. The difference between the two is that gray hydrogen’s carbon dioxide is released to the atmosphere while that from blue is trapped and sequestered underground. Both come with climate-warming gas leaks in the wellhead-to-factory transportation chain. Furthermore, on the social side, more than a century of boom-and-bust oil and gas development has brought unequal economic results to the state.

Cleaner “green” hydrogen knocks hydrogen atoms off water using renewable energy. But New Mexico is a high desert, already suffering from a decades-long drought — there isn’t much extra water for hydrogen.

These issues came to a head at San Juan College in Farmington in early October at a meeting of the state’s Energy Transition Act Committee. It recommended, among other things, that the state Economic Development Department spend $6 million in ETA money on four projects, two of which would develop hydrogen in the San Juan Basin. Another part of the recommendation proposed training money for San Juan College, where the School of Energy had proposed a panoply of programs, including training workers for hydrogen production jobs.

Lawmakers passed the ETA in 2018 to wean the state off fossil fuel power production in favor of renewable energy. It also set aside money in a trio of funds to retrain, support and create new jobs for those who lost their jobs when the coal-fired San Juan Generating Station closed as a result of the ETA. The final payments will be decided and paid out by the Department of Indian Affairs, the Department of Workforce Solutions and the Economic Development Department, following recommendations from the ETA committee.

At the meeting, Sandel, the committee’s lead convener and one of Gov. Lujan Grisham’s travel partners, said, “This conversation we are having right now is that job that we were hired to do four years ago.” A lawsuit not directly related to the grant money held up the process for years.

Little public notice was given for the meeting — the ETA website posted the meeting agenda after it happened. Its nine members came from communities around Farmington and the Navajo Nation, and they didn’t answer questions from the public about who wrote the draft it was debating. Committee members may not have known themselves. In the meeting’s rough video link, it wasn’t clear who said, “I don’t know why the convener asked me to come here today. … I don’t know what the proposals were.” Researching the proposals on the ETA website wouldn’t have helped either: Those haven’t been updated since they were first posted in 2020, even though some businesses have since changed plans.

In subsequent emails, Sandel said that he wrote the draft himself. Sandel is the vice president of the Aztec Well group of companies, which claims operations across 12 states. He also had a hand in drafting a hydrogen development act for the New Mexico Legislature in 2022, which was shot down.

Confusion over the process and the committee plagued the meeting. When told the committee would only make recommendations and not dispense money, Chili Yazzie, a Navajo community organizer, said, “It’s like you’re handing out empty Christmas packages here.” Sandel responded, “I will be the first to admit that this process has been discombobulated.” He put the blame on the lawsuit and the fact that “There is not a single cabinet secretary that was secretary when we started.”

After the committee waded through further confusion over grants from the Department of Indian Affairs (it offered grants before the recommendation process and without following state procedures, according to the department’s acting chief), the bulk of the remaining controversy centered on $6 million for economic development.

The draft proposal split that money between four proposals from out-of-state companies. Joseph Hernandez, a Navajo Indigenous rights organizer and one of the committee members, asked why smaller local businesses weren’t listed in the draft since the money would go further for small projects than large ones.

Grant money would offset a fraction of the projected costs of the four businesses recommended in the draft: Kinetic Power, SonoAsh, Big Navajo Energy and Libertad Power. Furthermore, the 2020 project proposals from Libertad and Big Navajo Energy listed on the ETA website show them developing hydrogen from natural gas, plans that carry high environmental costs and controversy. (At an ETA meeting last November, a Libertad representative said that the company was now “agnostic” about the source of its hydrogen.)

“The build-out of hydrogen is speculative, time-intensive and will be arduous.”

~ Mike Eisenfeld, energy and climate program manager, San Juan Citizens Alliance

The ETA states that the Economic Development Department grant money is for “fostering economic development opportunities unrelated to fossil fuel development or use.”

“I do not see these four projects as following the spirit of the law,” Hernandez said. “The law perfectly states that we cannot give any of the $6 million to fossil fuel projects.”

Sandel disagreed. “I think that there are a number of different interpretations if that is a ban.”

“It’s a proven fact that extractive energy is the cause of the climate crisis,” Yazzie told committee members. “Look deeply into the eyes of your grandchild and tell them what you’re doing.”

“I don’t think we have consensus, which is fine,” Sandel said before calling a vote on the draft. It passed 5-2 with two abstentions due to conflicts of interest.

After the meeting, the Sierra Club’s Feibelman said, “People came out hand over fist,” to oppose the four large proposals, despite the confusion.

Bruce Krasnow, public information officer with the Economic Development Department, said the department will review the recommendations by the end of the year and will contact the governor’s office, lawmakers and other stakeholders when assessing the grant proposals.

*   *   *

The morning after the meeting, the White House snubbed Lujan Grisham’s proposal tying Wyoming, Colorado, Utah and New Mexico together in the Western Interstate Hydrogen Hub (WISHH). The billion-dollar plan promoted natural gas-based hydrogen from the four states, while creating transport and power generation projects to use it. No state in the group had more departments, schools and other government institutions lined up to promote and work on WISHH than New Mexico.

After the snubbing, Lujan Grisham’s office released a press release proclaiming, “Our bullish outlook has not changed, and we will continue to move forward,” despite the federal setback and the fact that similar New Mexico-only projects were defeated in the last two state legislative sessions.

According to the release, the governor is working with four companies, including Libertad — one of the projects tapped by the ETA committee — and Tallgrass Energy, which is planning a controversial hydrogen pipeline that would run through the Navajo Nation. The other two are Navajo Agricultural Products Industry, which wants to transfer its operations to hydrogen power, and Avangrid, which joined her on the trip to Australia.

Last month, the Institute for Energy Economics and Financial Analysis released a withering report titled “Blue Hydrogen: Not clean, not low carbon, not a solution” that punches holes in the economic, environmental and scientific arguments around fossil fuel hydrogen. The report says that these projects “will make global warming worse” because of the greenhouse gases that will leak during the process.

“The build-out of hydrogen is speculative, time-intensive and will be arduous,” said Mike Eisenfeld, the energy and climate program manager with the San Juan Citizens Alliance. “The denial of the WISHH submittal suggests that blue hydrogen was properly assessed as extremely problematic.”

About the state’s continued hard push for hydrogen, Feibelman said, “It’s really quite, quite baffling.”

This story first appeared in Capital & Main.

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