The Industrial Carbon Reduction Act establishes a framework for reducing carbon emissions in New Mexico's industrial sector by creating two key programs: the Carbon Reduction Production Incentive Program and the Carbon Reduction Investment Grant Program. The Act defines various terms related to carbon intensity and eligibility for incentives, including the establishment of industry benchmarks and the calculation of carbon reductions by the Department of Environment. Eligible entities, which are defined as those operating qualified industrial facilities in New Mexico, can receive financial incentives for reducing their carbon intensity by at least 40% below the industry benchmark. The Act also mandates the creation of a nonreverting fund to support these initiatives, with an initial transfer of $50 million from the general fund to kickstart the program.

Additionally, the Act outlines the responsibilities of both the Department of Economic Development and the Department of Environment in implementing the programs, including rulemaking and the establishment of application processes for grants and incentives. The departments are required to publish regular reports detailing the progress and effectiveness of the programs, including the number of applications received, certifications issued, and economic impacts such as job creation. The provisions of the Act will take effect on July 1, 2026, and aim to promote sustainable industrial practices while fostering economic growth in New Mexico.