The New Mexico Paradox

Energy Transition Leader and Laggard

Shiprock, in Navajo country in northeastern New Mexico. Photo credit: Steven Baltakatei Sandoval

So, now that I’ve gotten you totally hooked on how amazing the energy transition is, why should you care about New Mexico in particular — especially if you don’t live here?

Two main reasons: One is that this happens to be the state I’m writing about, and I plan on giving you an especially accessible, interesting on-ramp to understand the big picture of the energy transition using this particular lens. To the best of my ability, I’ll make this newsletter something that even ME patients whose brains are wounded will be able to enjoy — which should help it go down easy for everyone. And the dynamics in New Mexico will shed light on the dynamics everywhere.

But also, New Mexico’s energy transition really is especially fascinating. For one thing, New Mexico is hugely ambitious. It was the third state in the nation to commit to 100% renewable energy (by 2045), after Hawaii and California. (This was the 2019 Energy Transition Act.) And it’s adopted the same goals for zero emissions vehicles as California — 82% of new passenger vehicle sales by 2032.

But unlike California, New Mexico is poor. New Mexico’s GDP in 2024 was $140 billion, compared to $4 trillion for California. And the typical New Mexico household earns two-thirds as much as one in California — $61,000 versus $90,000 in 2023. New Mexico is also largely rural, so those few dollars get stretched over a large area.

So New Mexico shows that the energy transition is possible even in a poor, rural state — and we’re going to see how.

There’s a big but, though: Even with these bold goals, New Mexico is also the #2 oil producer in the US, following only Texas. Financially, it’s hugely reliant on the fossil fuel industry, with about a third of the state budget coming from the oil and gas industry. And that reliance has only grown: Crude oil production more than doubled from 2019 to 2024.

Put that together with how poor New Mexico is, and you see that the state is in a bit of a bind. It can’t afford to just stop pumping oil — that’s how it pays its teachers and paves its roads. And indeed, so far, it’s made no effort to leave fossil fuels in the ground. But ultimately, that’s what we have to do to protect the climate.

What New Mexico has done instead is to work to make its fossil fuel production cleaner. In particular, when oil is pumped, methane often comes with it. Collecting that methane is sufficiently difficult and expensive that oil companies typically just release it or burn it off. But methane is a terrible greenhouse gas, about 80 times as bad as carbon dioxide for the first 20 years after release. New Mexico has enacted rules that lead the nation in requiring oil producers to collect and use that methane instead.

Add one more layer to New Mexico’s energy transition puzzle: justice. I told you that while the energy transition is inevitable, the big unanswered questions are how fast and how justly it will happen. In New Mexico, a critical backdrop for justice issues is that more than 10% of New Mexicans are Native American, and a large portion of them are impoverished and live in rural areas. When the San Juan coal plant was recently closed (a triumph we’ll talk about more), guess which group lost most jobs? Native Americans. They’ve also been forced for decades to breathe in the soot the coal plant coughed out. The Energy Transition Act worked with mixed success to ease the financial stress caused by the plant closure.

Many Native Americans also see the opportunities the energy transition presents. The Jicarilla Apache Nation hosts a large solar farm for Albuquerque and is planning more projects. The Inflation Reduction Act brought off-grid solar and battery packs to hundreds of Navajo homes that never had power before.

Finally, climate change is not an abstraction in New Mexico. New Mexico has already warmed by 3.5 degrees Fahrenheit since the 1970s, and it’s in the middle of a megadrought that is the most severe in at least 1,200 years. Wildfires are exploding: The 2022 Hermit’s Peak/Calf Canyon fire was the worst one in state history, burning 341,000 acres. The Rio Grande, which cuts down the middle of the state bringing life-giving water, is drying up. And the state’s iconic piñon trees are dying, casualties of drought, heat and bark beetles.

The first specific thing I want to focus on with New Mexico’s energy transition is to tell you about the Energy Transition Act, the legislation that set these super-bold renewable energy goals. I’ll tell you both about what it’s accomplishing and how it came to be — with lessons for other states.