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New Mexico’s Green Economy: Capitalizing on Assets and Opportunities September 21, 2009 Developed by Governor Bill Richardson’s Green Jobs Cabinet to fulfill Executive Order 2009-002 Governor Richardson’s Green Jobs Cabinet 1

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NEW MEXICO GREEN JOBS CABINET Dear Governor Richardson, We are very pleased to submit to you the Green Jobs Cabinet Report fulfilling a requirement of Executive Order 2009-002.The following report provides an overview of the green economy in New Mexico as well as strategy and policy recommendations for growing this important sector. This report is the result of an extensive public process and reflects the input of businesses, citizens and experts from across New Mexico. As a result of your long-standing commitment to clean energy, New Mexico’s green economy has grown over 50% between 1998 and 2007. Clean energy jobs have grown by 118% and energy efficiency jobs have grown by 184%. New Mexico is now home to leading green economy manufacturers like Schott Solar and Emcore, to wind, solar and geothermal energy projects, to an advanced green building sector, and to new clean technology start-up companies. Local green businesses are growing aggressively. But this is just the beginning of how the green economy can foster prosperity in New Mexico. Abundant renewable energy resources, world-class clean technology research and manufacturing, attractive incentives, low business costs, and visionary state, federal and local government leadership are drawing international attention to the Land of Enchantment. The New Mexico Economic Development Partnership and the Economic Development Department are in contact on a weekly basis with many clean energy businesses considering New Mexico as their primary North American production location. However, competition for new investment between states, and internationally, is intense as the United States seeks to regain leadership in the production of clean energy components. In this time of global recession, New Mexico must remain vigilant to ensure it continues to attract investment and grow its green economy. The Green Jobs Cabinet report outlines five strategies to grow New Mexico’s green economy and offers recommendations to achieve these goals: GOAL #1: Be the Leader in Renewable Energy Export GOAL #2: Be the Center of the North American Solar Industry GOAL #3: Lead the Nation in Green Grid Innovation GOAL #4: Be a Center of Excellence for Green Building and Energy Efficiency GOAL #5: Have a Highly Skilled and Ready-to-Work Workforce The Green Jobs Cabinet looks forward to your review of this report and to implementing priority actions that are identified. Policy and program development to both stimulate job creation and ensure New Mexicans are well prepared to fill those jobs will be needed. The Cabinet would like to recognize Daniela Glick, former Deputy Secretary of Economic Development, as the key catalyst behind this report, and Brendan Miller, Green Economy Manager, for spearheading its production. Sincerely, Fred Mondragon, Cabinet Secretary (Chairman), Economic Development Department Dr. I. Miley Gonzalez, Cabinet Secretary, Department of Agriculture Joanna Prukop,Cabinet Secretary,Energy,Minerals and Natural Resources Department Ron Curry, Cabinet Secretary, Environment Department Sarah Cottrell, Energy and Environmental Policy Advisor, Governor’s Office Dr. Viola Florez, Cabinet Secretary, Higher Education Department Dr. Veronica Garcia, Cabinet Secretary, Public Education Department Gary Bland, Officer, State Investment Council Ken Ortiz, Cabinet Secretary, Department of Workforce Solutions 2 Governor Richardson’s Green Jobs Cabinet

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Table of Contents 1. Acknowledgements and Contact Information 4 2. Background on New Mexico’s Clean Energy and Climate Change Policies 7 3. Purpose and Framing of This Report 10 4. Summary of Recommendations to Build New Mexico’s Green Economy 14 5. Overview of the Green Economy in New Mexico 6. Renewable Energy A. Solar Energy B. Wind Energy C. Geothermal Energy D. Customer-Scale Renewable Energy E. Community-Scale Renewable Energy 7. Solar Manufacturing and Other Clean Technology Manufacturing 8. Clean Technology Innovation and the Green Grid 9. Green Building Construction and Renovation 10. Biofuels 11. Mass Transit and Low Carbon Transportation 12. Environmental Conservation and Mitigation 13. Recycling and Reuse 14. Water Quality and Conservation 15. Efficiency and Environmental Jobs in the Fossil Fuel Industries 16. Ecotourism 17. Sustainable and Organic Agriculture 18. Workforce Development 19. Water Use and the Green Economy 20. Environmental Effects of the Green Economy 21. Glossary 22. End Notes 23. Appendices 21 24 30 33 35 36 44 46 52 57 61 67 68 69 71 73 75 77 80 82 84 86 92 97 Governor Richardson’s Green Jobs Cabinet 3

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1. Acknowledgements & Contact Information This report was prepared under the leadership and direction of Governor Richardson’s Green Jobs Cabinet, created in January 2009. Members of the Cabinet Include: • • • • • • • • • • Cabinet Secretary Fred Mondragón, NM Economic Development Department (Chair) Deputy Cabinet Secretary Daniela Glick, NM Economic Development Department (Chair Designee) Cabinet Secretary Joanna Prukop, NM Energy, Minerals and Natural Resources Department Cabinet Secretary Ron Curry, NM Environment Department Cabinet Secretary Miley Gonzalez, NM Department of Agriculture Cabinet Secretary Ken Ortiz, NM Department of Workforce Solutions Cabinet Secretary Viola Florez, NM Higher Education Department Cabinet Secretary Veronica Garcia, NM Public Education Department Officer Gary Bland, NM State Investment Council Sarah Cottrell, Governor Richardson’s Energy and Environment Advisor Key support was provided by: • • • • • • • • • • • Brendan Miller, NM Economic Development Department Craig O’Hare, NM Energy, Minerals and Natural Resources Department Jon Goldstein, NM Environment Department Paul Gutierrez, NM Department of Agriculture Gregory Scheib, NM Department of Workforce Solutions Len Malry, NM Higher Education Department Melissa Lomax, NM Public Education Department Charles Wollman, NM State Investment Council Sandra McCardell, New Mexico Green Collaborative Sandra Ely, NM Environment Department Melissa Dane, New Mexico Fellow Summer Intern This report reflects the direct input from over 100 people involved in all aspects of the green economy in New Mexico, and the indirect contributions of many more who have worked in this sector for years. Their sustained leadership over time and their contributions to this report are greatly appreciated. 4 Governor Richardson’s Green Jobs Cabinet

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Special thanks to the Dreaming New Mexico Project, New Mexico First, and New Mexico Community Capital for their recent reports on New Mexico’s green economy. A number of the images and portions of the content in this report are drawn from these sources. Thanks also go to former Cabinet Secretary of Workforce Solutions, Betty Sparrow Dorris, for her contributions, and the Economic Development Department’s Marketing Division, especially Linda Smith and Michael Moxey, for their help in preparing this report. For more information on this report, please contact: Brendan Miller, Green Economy Manager Economic Development Department 1100 St. Francis Drive Santa Fe, NM 87505 (505) 827-0288 Brendan.Miller@state.nm.us Governor Richardson’s Green Jobs Cabinet 5

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6 Governor Richardson’s Green Jobs Cabinet

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2. Background on New Mexico’s Clean Energy & Climate Change Policies The Governor’s Executive Order Recognizing the abundant opportunities to grow New Mexico’s economy through sustainable and green industries, Governor Richardson signed Executive Order 09-002 on January 21, 2009, establishing the Green Jobs Cabinet. The Governor directed the Cabinet to prepare a report that considers opportunities and strategies addressing: • • • • • • • • New Mexico’s unique and sustainable competitive advantages in clean energy and clean technology; Manufacturing of renewable energy system components; Installation, operation and maintenance of renewable energy systems at distributed- and utility-scales; Utility-scale renewable energy for export; Green building and energy efficiency contracting for residential, commercial and institutional customers; Regionally appropriate biofuels production, research and infrastructure; Sustainable agriculture; Research and development, commercialization and manufacturing of new clean energy and “green grid” technologies and solutions, identified by New Mexico’s Science and Technology Plan, for deployment in New Mexico and outside the state; • Statewide “green” workforce development pathways and coordination to ensure that all New Mexicans are well prepared for existing and future clean energy jobs. This may include the development of new curricula, educational and training programs, and communication of those programs between secondary and postsecondary education, and industry; • • Strategies to mitigate negative impacts on New Mexico’s economy associated with increasing fuel costs; and Opportunities to raise New Mexico’s profile and attract out-of-state public and private investment. This report is the outcome of that effort. The National Solar Thermal Test Facility at Sandia National Laboratories Governor Richardson’s Green Jobs Cabinet 7

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Public Input Process Significant efforts were made to incorporate comments and suggestions from the public in this report. The public input process included: • • Interviews with over 100 leaders in the green economy. Two press releases to inform the public of the creation of the Green Jobs Cabinet and invite them to sign up to receive periodic email updates. A monthly Green Economy Initiative newsletter was established to share information on what is happening in New Mexico. Over 600 people New Mexico State University’s Environmental Chemistry Lab currently subscribe. • A road show describing areas of opportunity in clean energy and technology was undertaken. Presentations were made in Clovis, Portales, Hobbs, Carlsbad, Artesia, Roswell, Deming, Lordsburg, Silver City, Farmington, Window Rock, Gallup, Las Cruces, Albuquerque and Santa Fe. Presentations were also made at the American Indian Chamber of Commerce Conference in Albuquerque and through the Agricultural Extension Service’s remote Centra system. • • • A formal Call for Comments was issued in May 2009 to solicit comments and recommendations from the public. A draft of this report was made available for review and comment in August 2009 and these comments were incorporated into the final report. Information was also gathered from a number of conferences and trade shows including: the Technology Ventures Corporation Energy Summit in the Sandias (12/08), the Regional Development Corporation’s Green Jobs New Mexico State University’s Agricultural Science Center at Artesia is the location for two large ponds where algae is being grown. The brackish water in the ponds is gently stirred by paddlewheels powered by electricity. Summit (1/09), Rocky Mountain Technology Alliance’s New Energy Summit (3/09), New Mexico First Energy Economy Town Hall (5/09), New Mexico Geothermal Working Group (5/09), Renew ’09 Conference (6/09) and the Intersolar Trade Show in Munich, Germany (6/09). Clean Energy and Climate Policy Context The Governor’s Executive Order notes the unique circumstances that make the signing of the order timely for New Mexico, including the development of regional and national clean energy and climate change policies. New Mexico is a member of the Western Climate Initiative, a coalition of 11 U.S. states and Canadian provinces, that is designing a regional greenhouse gas (GHG) capand-trade program that is scheduled to begin in 2012. In addition, Congress is currently considering the American Clean Energy and Security Act of 2009 that includes a GHG cap-and-trade component that is also scheduled to start in 2012 according to the House-passed version. States with workforces that can meet clean energy and climate change challenges will be positioned to reap the benefits of the new energy economy. New Mexico’s world-class renewable energy sources, nation-leading universities and national laboratories, clean 8 Governor Richardson’s Green Jobs Cabinet

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energy incentives and private investment commitment put the state in a unique position to further grow a green workforce. This report contains recommendations for assuring that New Mexico takes full advantage of existing opportunities to prepare for the new energy economy. • established to deliver New Mexico’s abundant, clean energy to markets in western states. The governor established the Environmental Justice Task Force to avoid disproportionate environmental impacts of proposed projects to low-income communities and communities of color. • The State’s renewable portfolio standard requires 20% renewable energy by 2020 for investor-owned utilities and 10% by 2020 for rural elctric cooperatives. • The Governor established the Clean Energy Development Council to develop policy recommendations to expand clean energy development in New Mexico. This report from the Green Jobs Cabinet builds on Governor Richardson’s previous policies to ensure that New Mexico remains a leader in clean energy and the green economy. The Greening of All Jobs In the future, all of our industries and jobs will become “greener” as energy efficiency, waste reduction, and environmental protection increase in importance. Programs like the Environmental Department’s Green Zia program, the City of Santa Fe’s CoolBiz program. and the Manufacturing Extension Partnership’s initiative to turn energy efficiency and waste reduction into increased profitability are helping business to make this transition. 1 Recent Policy Developments In 2004, Governor Richardson declared New Mexico “The Clean Energy State.” Since that time the state has implemented many programs and initiatives to promote clean energy and reduce greenhouse gas emissions under the Governor’s leadership. highlights include: • The Governor established, through Executive Order, the Climate Change Advisory Group (CCAG) to make recommendations for reducing the state’s greenhouse gas emissions to targeted levels. The CCAG delivered 69 recommendations to the Governor in December 2006. • The Legislature passed, and the Governor signed, numerous clean energy incentives including the Renewable Energy Production Tax Credit, the Advanced Energy Tax Credit and the Manufacturing Tax Credit. • The Legislature passed, and the Governor signed, amendments to the Efficient Use of Energy Act with aggressive requirements for investor-owned utilities to provide more energy efficiency to customers. • The Renewable Energy Transmission Authority was The SunCatchers™, newly designed solar power collection dishes at Sandia's National Solar Thermal Test Facility. Designed for highvolume production, ease of maintenance, and cost reductions, the dishes could be in commercial service by 2010. Governor Richardson’s Green Jobs Cabinet 9 For more details about Some of the these initiatives please see the appendix.

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3. Purpose and Framing of This Report There are four essential purposes of this document: 1. To provide a description and overview of the green economy in New Mexico to citizens, legislators and policy makers; 2. To evaluate opportunities for job creation and economic development; 3. To develop a strategy ensuring New Mexico has a trained workforce for employment in the green economy; and GOVERNOR’S OFFICE AND EXECUTIVE POLICY MAKERS STATE LEGISLATORS AND LOCAL GOVERNMENT OFFICIALS CITIZENS AND THE GENERAL PUBLIC 4. To outline the State’s strategy for growing the green economy, with detailed recommendations. This report serves as a “master report,” covering multiple, overlapping audiences. In the future, shorter documents covering specific targets areas will be produced from the contents of this report. Recommendations in this report align with other recent reports dealing with the green economy including the New Mexico First Energy Economy Town Hall recommendations, the State Technology21 Science and Technology Report, and the New Mexico Ecosystem Report.2 In some cases proposed policies are drawn directly from these reports. Summaries of the reports are provided in the appendix. JOB SEEKERS, STUDENTS AND EDUCATORS Focus on New Mexico’s Competitive Advantages The Green Jobs Cabinet is tasked with promoting economic development through the expansion of clean energy and clean technology industries. This report evaluates how New Mexico can leverage its competitive advantages to grow its green economy and create permanent high-wage jobs. Although the green economy is projected to grow nationwide, there is intense competition between states for investment dollars, especially given recent job losses created by the global recession. New Mexico must continue to aggressively compete for investment if it wants to capture its share of economic development from clean energy and clean technology. New Mexico is blessed with many natural advantages, but we must remain vigilant to ensure our state is positioned favorably in comparison with other states. 10 Governor Richardson’s Green Jobs Cabinet

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To grow New Mexico’s green economy we must: • • Provide incentives for job creation; Stimulate or guarantee demand at state and local levels for the products of existing clean tech manufacturers and producers, and assist in attracting new businesses; • • Develop a highly skilled workforce; and Provide a supportive regulatory environment. Stimulate Demand INCENTIVES FOR JOB CREATION Highly-skilled Workforce Supportive Regulatory Environment Immediate Investment for Long-Term Return New Mexico must not evaluate policies based on cost alone. While it is critical for governments to think in terms of budgets and costs we must also think in terms of how immediate investments will generate long-term returns. Examples of appropriate state investments are targeted tax credits, incentives and direct equity contributions. Allocating funds for incentives for desired industries should be viewed as co-investment by the state in these businesses. Like any investor, the state should expect a return, and that return comes in the form of job creation and new tax revenue. Considering future return on investment (ROI) will foster wise investments that will allow New Mexico’s citizens to prosper in a greener, cleaner economy. Create Industry Clusters The biggest return on investment will come through investing in clusters of related industries because these clusters maximize economic value. Industry clusters are a critical factor in the state’s ability to attract sustainable investments necessary for continuous economic development.3 Clusters are defined by: • • Geographically bound concentrations of similar, related or complementary businesses; Active channels for business transactions, communications and dialogue; Governor Richardson’s Green Jobs Cabinet 11

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• • Sharing specialized infrastructure, labor markets and services; and Facing common opportunities and threats. The advantages of clusters include: • • Giving businesses the edge in knowledge transfer, access to suppliers, customer support services and skilled labor pools; and Allowing businesses to focus on their strengths and seek profitable synergies. Innovation, imitation, and entrepreneurship fuel competitive clusters.4 Entrepreneurship and new start-ups are especially critical for the emergence and growth of clusters, whereas established firms are more critical for the competitiveness of mature clusters.5 Research by the Kauffman Foundation indicates that during the period of 1980-2005 the only positive net employment growth in the United States came from startup businesses.6 Because the green economy is an emerging sector, entrepreneurship is a competency the state will need to cultivate. Fortunately, New Mexico is home to the largest percentage of Ph.D.s and engineers as a percentage of the workforce,7 nationally recognized researchers working on clean technologies, a strong venture capital community and a growing clean tech manufacturing cluster.We must build upon these strengths to develop our industrial clusters. 12 Governor Richardson’s Green Jobs Cabinet

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New Mexico’s Strengths, Weaknesses, Opportunities and Threats (SWOT) New Mexico’s SWOT analysis demonstrates the opportunity to strategically position the state for optimum job growth. Helpful Strengths: • • • • • • Internal Factors • • • • • • • • • • World-class solar, wind and geothermal resources: depth and diversity of resources Current incentives and tax credits for key green industries Substantial open land and a supportive permitting climate Strategic location at the intersection of three U.S. electricity grids and proximity to demand centers Strong support from Governor, Lt. Governor, state legislature, local governments and New Mexico’s entire federal delegation A growing cluster of clean tech manufacturing, particularly solar components supported by a well- developed manufacturing workforce and low costs of doing business Tremendous intellectual capital at our national laboratories and universities Existing, nationally recognized, green job training programs at several state community colleges NM Renewable Energy Transmission Authority A small, nimble, accessible, and responsive state government and local governments Green building expertise Strong agriculture and tourism industries Available brackish water supplies Existing oil and gas wells provide economical access to geothermal resources Proximity and relationship with Mexico A deeply rooted and long-standing respect for the natural environment Weaknesses: • • • • • • • • • • A small-population state with limited tax revenue Limited in-state demand for clean tech products Cheap coal-fired electricity makes renewable energy comparatively expensive State poverty Incentives for utilities are not completely aligned with clean energy economic development Workforce readiness Legislative schedule can limit immediate response to urgent issues Too few entrepreneurs and an underdeveloped entrepreneurial climate Arid state means limited water availability A tax base in need of diversification Harmful Opportunities: external Factors • • • • • • • Strong interest in NM from international businesses National energy independence goals Supportive federal government and stimulus funds Renewable energies are quickly becoming more cost effective Solar and other clean tech manufacturers are looking to establish new facilities Proposed national Renewable Energy Standard Proposed national carbon pricing Threats: • • • Global recession Fierce competition from other states for private and public investment Climate change Governor Richardson’s Green Jobs Cabinet 13

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How to Build New Mexico’s Green Economy 1. Be the Leader in Renewable Energy Export: Establish New Mexico as the leading exporter of renewable energy and renewable energy products, in areas like electricity and biofuels. 2. Be the Center of the North American Solar Industry: Make New Mexico the “Solar Valley” of the United States. New Mexico must harness its potential to develop a vertically integrated solar economy from R&D and demonstration to commercialization, startup businesses, manufacturing, and installation. The entire value chain resides in New Mexico. 3. Lead the Nation in Green Grid Innovation: Leverage technology from our national laboratories and universities to create an entrepreneurial engine of new high tech, clean tech businesses. Make the “green grid” a top priority. 4. Be a Center of Excellence for Green Building and Energy Efficiency: Remain a leader in green building and develop a sustainable energy efficiency renovation industry with a supporting cluster of green building product manufacturers. 5. Have a Highly Skilled and Ready-to-Work Workforce: Matching industry growth projections with a highly skilled workforce is paramount to the success of New Mexico’s green economy. 4. Summary of Recommendations to Build New Mexico’s Green Economy Although detailed recommendations are provided for each segment of the green economy throughout the report, it is helpful to group them into a few broad policy statements linked to the state’s economic development goals outlined above. Detailed recommendations are linked by their numbers to these policy statements. To be the leader in renewable energy export, New Mexico must: • • • • • Incentivize and stimulate renewable energy growth, both electricity and biofuels (RE-2, RE-6, US-1, B-1, B-2, B-3, B-4, B-5, GE-1, GE-2, GE-3, GE-4, CS-1 through CS-8, COR-1) Get our renewable energy to market (RE-3, RE-4, RE-5, RE-7) Align incentives for utilities with the state economic development goals (SE-1, EE-7) Provide a supportive regulatory environment (RE-1, SE-1, W-1, W-2, E-1, E-2, E-3, E-4, E-5, E-6, RE-6, CS-7, WE-3) Market and promote the state’s assets, accomplishments and vision (RE-8, GE-1, SM-4, CTI-6) 14 Governor Richardson’s Green Jobs Cabinet

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To be the center of the North American solar industry, New Mexico must: • • Stimulate the rapid growth of solar energy with predictable statewide incentives and programs (US-1, SE-1, SE2, SE-3, CS-1, CS-2, CS-3, CS-4, CS-5, CS-8. COR-1) Incentivize solar manufacturing (SM-1, SM-2, SM-3, SM-4, SM-5, SM-6, SM-7, SM-8, SM-9) To lead the nation in Green Grid Innovation, New Mexico must: • • Promote commercialization of new clean technologies (CTI-1, CTI-3, CTI-4, CTI-5, CTI-6, CTI-7, CTI-8) Put focus on the Green Grid to leverage limited resources (CTI-2) To be a center of excellence in green building and energy efficiency, New Mexico must: • • • Develop a building energy efficiency renovation sector (EE-1, EE-2,EE-3, EE-4, EE-5, EE-6, EE-7) Maintain leadership in new construction of green buildings (GB-1, GB-2, CG-2, CG-3) Grow our cluster of green building product manufacturers (GBM-1, GBM-2, GBM-3) To have a highly skilled and ready-to-work workforce, New Mexico must: • • • • Create an industry-driven green workforce development sector strategy aligned with these economic development goals (WD-1) Develop green economy data and career framework (WD-2) Expand green job training programs across the state (WD-3) Provide customized just-in-time training solutions for growing green businesses (WD-4) Other important recommendations included in this report: • • • • • Increase promotion of clean technology businesses (CTM-1, WAQ-1, RR-1, RR-2, RR-3, Rr-4, RR-5, RR-6, RR-7) Support and grow our sustainable and organic agriculture industries (SA-1, SA-2, SA-3, SA-4, SA-5, SA-6, SA-7, SA-8, SA-9) Develop New Mexico as an ecotourism destination (ET-1) Develop low carbon transportation jobs (e.g. mass transit and alternative fuels) (LCT-1, LCT-2, LCT-3) Recognize and encourage environmental and energy efficiency jobs in all industries, especially the fossil fuel industry (EEF-1, EEF-2, EEF-3, EEF-4, EEF-5) Governor Richardson’s Green Jobs Cabinet 15

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