The Questa Hydrogen Project

Hydrogen is a colorless, odorless gas that occurs naturally and abundantly. In fact, it is the most common element in the universe, making up 75 percent of all matter. It can be produced from various sources like natural gas, renewable energy (solar, wind), or through electrolysis (splitting water molecules using electricity), and can be used to power vehicles, generate electricity, or provide heat in homes and businesses, with the potential for zero emissions.

The process of developing hydrogen at the Questa site will rely on the process of electrolysis (again, splitting water molecules using electricity) to separate hydrogen from oxygen in the water currently being held at the former molybdenum mine site in Questa. The process results in hydrogen that can be safely stored in containers for future use.

Yes. This project will use first-in-class safety procedures, including strict leak detection and monitoring systems, storage that uses specialized materials resistant to breakdown from hydrogen exposure, proper ventilation throughout the process, and the rigorous safety training for personnel. Further when handled responsibly like this, hydrogen is safer than other flammable fuels we rely on today. For example, hydrogen is nontoxic, unlike gas. And because hydrogen is much lighter than air, it dissipates rapidly when it is released, which means if there is a leak, it will dissipate quickly, reducing the likelihood of an explosion.

The co-op’s hydrogen project is green in several ways: (1) it uses electricity derived from solar power to in the electrolysis process; (2) it uses reclaimed water from either the shuttered Chevron Mine Superfund Site or the Taos Valley Regional Wastewater Treatment and Reclamation Facility in the electrolysis process; and (3) the process is emissions-free, meaning it’s not putting carbon, methane, or other greenhouse gases into the air. Unlike other hydrogen generation processes that rely on nonrenewable resources to isolate or burn hydrogen, this project is end-to-end renewable.

The proposed hub in Questa will be located near the Superfund site associated with the former molybdenum mine.

Project implementation is just getting underway. The construction will take place in 2025–2026 with operations expected to begin in 2026 or 2027.

On Jan. 10, the U.S. Department of Agriculture’s Rural Utility Service announced several awards to rural electric cooperatives, including Kit Carson Electric Cooperative (KCEC), to increase the availability of reliable energy for rural communities. The $231 million funding to Kit Carson Electric Cooperative is a mixture of grants and low-interest loans that will be used for the establishment of a hydrogen production hub in Questa. The facility will produce 104 megawatts of energy (that’s enough to power 25,000 homes annually) from hydrogen produced via electrolysis along with battery energy storage systems.

This project will provide substantial direct, indirect, and induced economic activity in northern New Mexico and beyond.

• The project will provide an additional $289 million in economic impact in the region over five years.
• The Village of Questa, population of 1,800, will see most of that: $206 million. This economic activity will also generate new tax revenue that will support critical public services (like a full-time, paid fire department and additional public safety officers) that have been difficult to provide with a depressed tax base following the molybdenum mine closure.
• Across all jurisdictions, this project is likely to generate upward of $44 million in tax revenue, again, with the majority of that revenue staying in Questa and able to support expanded public safety services.
• The project will also create more than 350 jobs during construction and scores of additional ongoing jobs going forward.

Kit Carson Electric Cooperative and USDA’s Rural Utility Services have an executed, obligated contract. Thus there is a signed agreement with the federal government to fund the project. That said, the federal actions related to freezing federal funding at USDA and other agencies have thrown a degree of uncertainty into the release of those funds and the future of the project in general. The most relevant executive order that has created a degree of uncertainty over the funding for this project requires all agencies (including the USDA’s Rural Utility Service, which approved the Questa hydrogen project) to pause disbursement of funds appropriated through the Inflation Reduction Act (IRA) or the Infrastructure and Investment and Jobs Act (IIJA) and review all grants, loans, contracts, and programs for alignment with the new administration’s energy priorities. Within 90 days (which would be April 19), all agency heads must submit a report to the Office of Management and Budget (OMB) and the National Economic Council (NEC) with recommendations for changes to any programs to align with the administration’s priorities. The executive order states that no funds can be disbursed by an agency until the Director of the OMB and the Assistant to the President for Economic Policy determine that those disbursements are consistent with the new administration’s priorities.

There is a fully executed contract between Kit Carson Electric Cooperative and USDA, so the funding and project are fully obligated. KCEC and Village leaders are committed to bringing this project to life. If existing funding is no longer available, different funding sources to launch the project would need to be identified, which would complicate the timeline, scope, cost, and breadth of economic and energy benefits compared to the current contract.

The Village, Kit Carson, and other supporters are actively educating community members and interested parties about the economic and energy benefits of this project. Continuing to highlight what this project means for Questa and the entire northern New Mexico region will be important in ensuring its successful implementation. Kit Carson Electric Cooperative holds a contract with the U.S. Department of Agriculture’s Rural Utility Service to implement the project. This $231 million award is under the purview of this agency (not the U.S. Department of Energy). As such, leaders within the agency, and the relevant policymakers that oversee the agency’s work, are the key decision-makers. The United States Department of Agriculture’s (USDA) Rural Development program is overseen by the Under Secretary for Rural Development and the Deputy Under Secretary for Rural Development.

The Rural Utilities Service (RUS) is overseen by the U.S. Department of Agriculture’s (USDA) Rural
Development agency. The RUS is a division of this agency. Key leaders include:

• Brooke Rollins, Secretary of Agriculture (confirmed Feb. 13, 2025)
• Gary Washington, Previous Acting Secretary of Agriculture
• Jacqueline Ponti-Lazaruk, Acting Deputy Under Secretary for Rural Development
• Chris McLean, Acting Administrator for the Rural Utilities Service
• Roger Glendenning, Chief Operating Officer for Rural Development
• Eric Vigil, Deputy State Director, New Mexico Rural Development.

USDA’s Rural Utility Service has worked to support rural communities for over 30 years. The agency
is required to:

• Provide public utilities to rural areas, such as water, waste disposal, electricity, and
  broadband internet.
• Administer loans, loan guarantees, and grant programs to eligible populations.
• Provide infrastructure improvements to rural communities.

The Village of Questa and KCEC have received letters of support from a wide array of community
members, businesses, elected officials, local jurisdictions, and partners. These project supporters
include:

• Village of Questa Town Council
• Questa Economic Development Fund
• Town of Taos
• Taos County
• Taos Ski Valley
• Linda Calhoun, Mayor, Town of Red River
• Questa Independent School District
• Taos High School
• University of New Mexico – Taos
• University of New Mexico – Taos HIVE
• Holy Cross Medical Center
• New Mexico Municipal League
• Taos Community Foundation
• Hon. Governor of New Mexico, Michelle Lujan Grisham
• Hon. Sen. Roberto “Bobby” J. Gonzales, State Senator
• Hon. Rep. Kristina Ortez, State Representative
• Hon. Rep. Joseph Sanchez, State Representative
• State of New Mexico, New Mexico Economic Development Department
• State of New Mexico, Department of Workforce Solutions
• Centinel Bank
• Taos County Chamber of Commerce
• Questa Hydrogen Project 5 of 6
• Taos Ski Valley Chamber of Commerce
• Bond Plumbing and Heating
• Green Meadow Roofing and Construction
• Valverde Energy
• LOR Foundation
• Taos Housing Partnership
• Taos County Historical Society
• Taos Feeds Taos
• True Kids 1

Hydrogen releases will not affect clear skies in northern Taos County because hydrogen (H₂) is not a component of photochemical smog, which is made up of ground-level ozone and particulate matter, which are both regulated under the U.S. Clean Air Act. Hydrogen is neither a criteria pollutant under EPA National Ambient Air Quality Standards nor a listed hazardous air pollutant under federal air toxics regulations, and while it is colorless, odorless, non-toxic, and non-poisonous (though it can act as a simple asphyxiant in confined spaces), it disperses rapidly outdoors and does not contribute to haze or reduced visibility of the skies

Safety is the number one priority of KCEC and it has been since 1944. That commitment does not change now. The physical size and weight of a given gas’ molecules do not determine its use as a combustible fuel, but rather its chemical properties. The engineering and design of the hydrogen plant will utilize established codes and standards, along with compatible materials.

The engineering and design team are active contributors to evolving industry-accepted hydrogen codes and standards and will implement the most up-to-date information wherever applicable. This plant will use active safety measures throughout the plant.

• Prevention and Detection
  We use equipment and materials designed for hydrogen service, with sealed connections, proper gaskets, high-quality valves, and regular inspection and maintenance. Hydrogen systems are built and tested to strict engineering codes. Leak detection technology will be wrapped around the joints and fittings for low-level leaks which could otherwise go undetected.
  
• Active Monitoring
  Operators will conduct periodic walkdowns along the pipeline using a handheld hydrogen detector (“hydrogen sniffer”). During these inspections, the instrument is placed around fittings, joints, and other connection points to check for any detectable hydrogen leaks.
  
• Flame Detection Sensors
  We will have flame detection sensors installed so that in the event there is a leak and it subsequently ignites, we will have optical sensors for both IR and UV that are capable of detecting this and automatically shutting down the system.
  
• Pressure Sensors
  The system will be continuously monitored using SCADA (Supervisory Control and Data Acquisition) pressure sensors. These sensors track system pressure in real time and immediately alert operators to any sudden or unexpected pressure drops. If such a change occurs, the system can be automatically shut in while trained operators investigate the cause and respond appropriately.

Bottom line: hydrogen can be handled safely when facilities are designed with leak prevention, continuous detection, rapid automatic shutdown, strong ventilation, and ignition control—and those protections will be standard practice in this green hydrogen facility.

This project will be subject to and comply with all applicable federal, state, and local fire codes, ordinances, and municipal requirements, including all inspection and reporting regulations and requirements.

Protecting water resources is central to the project’s design and permitting process. KCEC is evaluating responsible options, including working with Chevron to utilize existing water rights historically used by the mine. As mine reclamation concludes, these rights could become inactive; using them for this project would help ensure they remain in beneficial use, avoid potential forfeiture by the State Engineer, and keep those water resources tied to the Questa community. In addition, the Office of the State Engineer’s impairment analysis for Chevron’s approved additional point of diversion (RG-14117-POD-18) found that diverting up to 250 acre-feet per year would not adversely affect the local aquifer, nearby wells, or surface water flows, as confirmed through NMOSE hydrologic modeling and approval.

Hydrogen leak detectors, often called “hydrogen sniffers” or combustible gas indicators, have been used safely and effectively around the world for decades to locate hydrogen leaks. Portable hydrogen detection technology has been available since the late 1930s, and it has improved significantly over the past 25 years with advances in microelectronics. Modern electrochemical sensors can quickly detect very small amounts of hydrogen—typically in less than 60 seconds and at concentrations below 100 parts per million (ppm)—allowing operators to identify and address leaks promptly.

Before the facility is installed, combustible materials will be removed from the plant area to minimize wildfire risk. In addition, each hydrogen storage tank bank will be equipped with pressure relief devices that are piped to dedicated vent stacks located in safe areas. These pressure relief systems are designed to prevent overpressure events and, if triggered during an external thermal event, to direct hydrogen through controlled releases to safe locations.

Not all hydrogen is produced the same way. This project involves green hydrogen, which is made using renewable energy to split water into hydrogen and oxygen through a process called electrolysis. Because no fossil fuels are used, the production process is designed to be zero-emission at the point of generation. When green hydrogen is used in a fuel cell, it produces electricity and emits only water vapor — with no carbon emissions and no combustion involved. This is different from hydrogen produced from natural gas, which can generate carbon emissions and other byproducts; that is not the process being proposed here. By utilizing green hydrogen, this effort would position Questa at the forefront of emerging clean energy technology while supporting a zero-emission energy solution at both production and use

KCEC did not expedite the NEPA process. It followed the process as written and required under federal guidelines. In early 2025, a series of executive orders issued by the Trump administration resulted in a Federal Register notice limiting the role of public comment in certain federal decisions. Although KCEC may not agree with this approach, the cooperative is obligated to comply with the federal requirements governing this grant.

KCEC has long believed that public engagement and stakeholder feedback are essential to responsible decisionmaking. Even when not required under NEPA, the Cooperative has made a proactive effort to host public listening sessions and community meetings to gather input from our members.

Our goal is to ensure our members feel heard and respected, and that their questions, comments, and concerns are thoughtfully considered and addressed

In August of 2023, the U.S. Department of Energy released its Intermediate Feasibility Study results regarding the production of clean hydrogen energy in Questa, NM. 

This report, prepared by the New Mexico Bureau of Geology and Mineral Resources and the U.S. Geological Survey, provides a detailed look at the geology and groundwater systems underlying the Questa area in Taos County, New Mexico. The study integrates geologic mapping, geophysical data, and well information to develop cross sections and a preliminary geologic map of the region. These findings help improve understanding of the local groundwater system and support informed decisions about water resources and land use in the community.

This report, prepared by the New Mexico Bureau of Geology and Mineral Resources and the U.S. Geological Survey, provides a detailed look at the geology and groundwater systems underlying the Questa area in Taos County, New Mexico. The study integrates geologic mapping, geophysical data, and well information to develop cross sections and a preliminary geologic map of the region. These findings help improve understanding of the local groundwater system and support informed decisions about water resources and land use in the community.

The U.S. Department of Agriculture’s Rural Utilities Service completed a federal environmental review of the proposed Questa Hydrogen Facility in Taos County, New Mexico under the National Environmental Policy Act (NEPA). The review evaluated potential environmental impacts associated with construction and operation of the hydrogen production facility, solar array, and related infrastructure.

A Finding of No Significant Impact (FONSI) is a determination made by a federal agency after completing an Environmental Assessment that a proposed project will not have significant effects on the human environment. When a FONSI is issued, the project can move forward without requiring a more extensive Environmental Impact Statement.

The review concluded that the proposed project is not expected to significantly affect land use, water resources, wildlife, cultural resources, air quality, or other environmental factors.

This briefing document outlines how the Questa Hydrogen Project supports national energy priorities while delivering economic and infrastructure benefits to northern New Mexico. Developed by Kit Carson Electric Cooperative, the project proposes converting reclaimed water from the former Questa molybdenum mine into clean hydrogen using electrolysis, creating long-duration energy storage and enough carbon-free power to serve nearly 25,000 homes annually. The document highlights the project’s role in strengthening U.S. energy independence, advancing rural economic development, and transforming a former industrial site into a productive clean energy asset.

This briefing document provides an overview of the Questa Hydrogen Project and its importance for rural economic development, energy reliability, and national energy priorities. Developed by Kit Carson Electric Cooperative and regional partners, the project proposes transforming the former Questa molybdenum mine site into a clean hydrogen production facility using electrolysis and reclaimed water from the site. The document outlines the project’s potential to power nearly 25,000 homes annually, create hundreds of jobs, and generate significant economic benefits for northern New Mexico while converting a former industrial site into a productive clean energy resource.

This technical report summarizes engineering, technology, and safety assessments conducted to support the development of the Kit Carson Electric Cooperative hydrogen production and storage project. Prepared by ENTRUST Solutions Group and project partners, the document reviews hydrogen equipment technologies, evaluates system design considerations, and identifies early safety and operational risks associated with hydrogen production, storage, and use. The findings help guide procurement strategies, facility design decisions, and safety planning as the project advances toward implementation.

This document provides answers to frequently asked questions about the proposed Kit Carson Electric Cooperative hydrogen project in Questa, New Mexico. The FAQ addresses common community questions about safety, environmental protections, water resources, wildfire risk, and regulatory oversight. It explains how the facility will use established engineering standards, continuous monitoring systems, and leak detection technologies to ensure safe operation, while also describing how green hydrogen is produced using renewable energy through electrolysis.