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F I S C A L I M P A C T R E P O R T

SPONSOR Wirth

ORIGINAL DATE

LAST UPDATED

2-8-06

2-10-06 HB HM29/aHBIC

SHORT TITLE Hydrogen Energy Liability Insurance

SB

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY

Synopsis of HBIC Amendment

House Business and Industry Committee amendment to HM29 amends the legislation as follows:

1. On page 3, line 10, after “interests”, insert “to include the hydrogen technology

partnership”.

House Business and Industry Committee amendment to HM29 adds no appropriation to the leg-

islation.

Synopsis of Original Bill

House Memorial 29 requests that the New Mexico Hydrogen Business Council convene a special

committee to develop and recommend a state-operated hydrogen energy liability insurance pro-

gram to ease economic barriers to hydrogen businesses in New Mexico.

Specifically the memorial notes that:

•

there is an urgent need to move the United States' energy economy away from

House Memorial 29/aHBIC – Page

2

petroleum-based systems and other limited resources of foreign fossil fuels for

reasons of national security; and

•

continued use of fossil fuels adversely affects the environment in two key ways:

increased pollutants and the production of greenhouse gases; and

•

the nation's future energy source mix should increasingly rely on clean, sustain-

able and renewable sources; and

•

extracted hydrogen will become an important element of the nation's energy port-

folio, because it can be obtained from domestic sources and its use emits only

water vapor; and

•

federal laboratories in the state of New Mexico have, for nearly thirty years, par-

ticipated in the evolution of technologies that allow for the use of hydrogen for

energy purposes, making the state a technology leader; and

•

the governor has proclaimed New Mexico the "Clean Energy State" and desires

the state to become a leader in hydrogen energy; and

•

the deployment of hydrogen-energy-based systems and businesses has been rec-

ognized as an important component of the state's economic development strat-

egy; and

•

a major impediment to more rapid implementation of hydrogen-based systems is

the absence of liability and property insurance for hydrogen energy installations;

and

•

the unwillingness of insurers to underwrite hydrogen systems, despite many sig-

nificant and distinguished studies indicating their safety, exists because very few

installations and very little data on their performance exist; and

•

should first-tier indemnification be provided to a significant degree, insurers are

likely to provide second- tier insurance; and

•

the state of New Mexico has the opportunity to take the lead nationally, in reme-

dying this situation by providing liability insurance to qualified hydrogen energy

installations, thereby accelerating the introduction of this important energy

source;

The memorial resolves that that the 2006 legislative interim, the New Mexico hydrogen business

council be requested to convene a committee with appropriate representation from state govern-

ment and business interests to develop draft legislation for the 2007 legislative session that cre-

ates a state-operated liability insurance program for certified hydrogen energy projects.

The memorial further resolves that copies of this memorial be transmitted to the secretary of

economic development and the governor.

There is no appropriation attached to this legislation.

House Memorial 29/aHBIC – Page

3

SIGNIFICANT ISSUES

EMNRD notes that, “Governor Richardson supports hydrogen technology in New Mexico; how-

ever, the unwillingness of insurers to underwrite hydrogen systems, despite many significant and

distinguished studies indicating their safety, exists because very few installations and very little

data on their performance exists. If the state provides first-tier indemnification, insurers are

likely to provide second-tier insurance.”

EMNRD further suggests that if the state provides this indemnification, qualified hydrogen-

energy installations (and businesses) would be more likely to locate in New Mexico, thereby ac-

celerating the introduction of this important energy source.

OTHER SUBSTANTIVE ISSUES

EMNRD indicates that the New Mexico Hydrogen Business Council is a member organization

made up of private business owners interested in promoting hydrogen energy in New Mexico.

The Council would not be obligated to follow through on the request made in this memorial.

BW/mt