New Mexico US has officially adopted regulations establishing the Clean Transportation Fuel Program (CTFP), marking the launch of the first clean fuel market in the US Southwest as per the recent release. It joins similar markets in California, Oregon, and Washington in the US, plus the Canada federal CFR and BC LCFS.
New Mexico’s CTFP is a market-based program designed to cut greenhouse gas emissions, reduce air pollution, and stimulate job creation by lowering the carbon intensity (CI) of transportation fuels. Transportation is New Mexico’s second-largest source of emissions, representing about a quarter of statewide totals. The CTFP supports the state’s climate goals, including a 45% emissions reduction by 2030 and net-zero by 2050, while delivering meaningful health benefits through reduced air pollution.
Overall, clean-fuel demand under the program is expected to be modest. Gasoline demand in New Mexico is about 1.0 billion gallons per year, while diesel demand is around 770 million gallons, resulting in a profile similar to Oregon’s, albeit with a smaller gasoline pool (Oregon’s gasoline demand is closer to 1.5 billion gallons annually). Both programs also feature broadly comparable CI reduction targets. Assuming a CI reduction target of 20% by 2030, our analysis estimates renewable diesel demand of roughly 129 million gallons by 2030, rising from approximately 32 million gallons in 2027. This projected demand is broadly in line with the nameplate capacity of the renewable diesel unit at HF Sinclair’s Artesia, New Mexico facility, suggesting that in-state renewable diesel supply could play a meaningful role in meeting program requirements.
The Environmental Improvement Board unanimously adopted the final CTFP rules on January 22, establishing April 1, 2025 as the program’s market opening date and enabling early credit generation and reporting. Formal fuel pathway certification begins in July 2026, with the initial compliance period running through December 31, 2026 and the first mandatory compliance reports due by April 30, 2027.
Authorized under legislation signed in 2024, the CTFP introduces a market-based credit and deficit system to lower the lifecycle carbon intensity of transportation fuels used in the state. The program sets declining CI targets relative to a 2018 baseline: a 20% reduction by 2030 and a 30% reduction by 2040. The CTFP applies to transportation fuels that are produced, imported, or dispensed for use in New Mexico. It incentivizes deployment of lower-carbon fuels and infrastructure, including ethanol, biofuels, renewable diesel, renewable natural gas, electricity, hydrogen, and associated charging and fueling assets. To calculate carbon intensity, New Mexico uses NM-GREET v1.0, a state-specific model adapted from the established GREET framework, which measures greenhouse gas emissions across the full lifecycle of transportation fuels. As per draft rules, conventional petroleum jet fuel is exempt from deficits, while alternative jet fuel operates under a separate aviation CI benchmark, creating a parallel crediting track rather than an immediate deficit obligation - there is indication that in the later years it can be added as a possible deficit source.
From an economic and public-health perspective, state modeling indicates meaningful upside. The Environment Department estimates more than 800 jobs supported statewide, annual health-care cost savings of up to USD 20.8 million once the program is fully implemented, and USD 1.65 billion in cumulative net benefits through avoided air-quality and climate damages. By 2030, emissions reductions are projected to include roughly 144 tons of PM2.5, 200 tons of VOCs, and 169 tons of NOx, pollutants that disproportionately affect overburdened communities and contribute to asthma and other respiratory illnesses.
Strategically, New Mexico becomes the fourth US state to implement a clean fuel standard, aligning it more closely with established programs in California, Oregon, and Washington while extending clean fuel market coverage into the Southwest for the first time. The April 1 launch is meant to provide near-term clarity for fuel suppliers, infrastructure developers, and credit market participants evaluating entry or expansion in the region.
Overall, the rule adoption signals that New Mexico is moving from policy design to market execution, with implications for fuel supply economics, clean infrastructure investment, and regional credit market development over the remainder of the decade.
ClearBlue Markets will monitor this market in conjunction with its ongoing clean fuels markets coverage. For more information about our Clean Fuels Market Intelligence offerings, please contact us.