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SANTA FE, N.M. (AP) New Mexico's Legislature has approved a bill aimed at reducing climate-warming pollution from cars and trucks through financial incentives to reward businesses that produce cleaner fuels.

The Senate recently voted 26-15, on a party-line vote with Republicans in opposition, to send the bill to Democratic Gov. Michelle Lujan Grisham, who supports the initiative.

California, Oregon and Washington already enforce law carbon fuel standards. New Mexico would be the first to follow suit.

The bill calls for a reduction in the intensity of greenhouse gas emissions for transportation fuels used in the state — of 20 percent by 2030 and 30 percent by 2040.

It would require producers of high-polluting fuels to buy credits from producers and importers of low-carbon fuels.

The program and its market for carbon credits would be established by mid-2026, with oversight by the state Environment Department.

Democratic sponsors of the bill anticipate it will spur investments in new fuels and new technologies. The transportation sector is the second largest source of greenhouse gas emissions in New Mexico behind the oil and natural gas industry.

State Sen. Mimi Stewart of Albuquerque rattled off a list of more than 20 companies and coalitions including Chevron that have expressed interest in the low-carbon fuel market under the proposed reforms. She also touted the health benefits through anticipated reductions in airborne pollution that contribute to ozone.

The bill narrowly won House approval on a 36-33 vote amid concerns about impacts on fuel prices on consumers in the nation's No. 2 state for oil production.

"I am concerned about what this bill will do to the price of transportation fuel," Sen. Greg Nibert of Roswell said during the Senate floor debate. "It's going to be felt the harshest by those who have the least, who can least afford these transportation fuels."

Bill cosponsor and Democratic state Rep. Kristina Ortez of Taos pushed back against those worries.

"We believe this is fear mongering," she told a Senate panel. "I come from a district that is very poor. I certainly would not bring a bill that would have an impact on my constituents and New Mexicans."

Republican Senate Leader Greg Baca of Belen cautioned legislators against imposing new pollution regulations on rural communities with clear skies in a sparsely populated state.

"Let's use common sense ... not this voodoo science that's being produced for us telling us that we have dirty air in this state in a populace of only 2 million, that we're somehow contributing to this global catastrophe that's being pushed on us."

Separately, a final House concurrence vote sent a $10.2 billion budget plan for the coming fiscal year to the governor for consideration and possible line-item vetoes.

New Mexico would set aside well over $1 billion to guarantee tuition-free college and sustain government spending in case its oil production bonanza fades in the transition to cleaner energy sources, under the general fund spending bill.

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