Texas Emission Reduction Program (TERP) Its History, Its Programs & Opportunities for Propane

In 2001, the 77th Texas Legislature enacted Senate Bill (SB) 5, establishing the Texas Emissions Reduction Plan (TERP). Over the last 20 plus years, the TERP Program has grown, and it is offering many opportunities for propane as an alternative fuel to help them meet those state implementation goals.

Since NOx is a primary precursor to the formation of ground-level ozone, the TERP targets areas in Texas designated as nonattainment for ground-level ozone under the federal Clean Air Act (FCAA), as well as other affected counties for ozone. Lowering NOx emissions from the TERP-eligible sources remains an important component of the State Implementation Plan (SIP), which details how the state will meet federal Clean Air Act requirements.

Revenue & Funding

The TERP is funded from fees and surcharges on obtaining a certificate of vehicle title for all vehicles, purchase or lease of heavy-duty vehicles and equipment, and registration and inspection of commercial vehicles. Revenue for the TERP Trust during the Fiscal Year (FY) 2022–2023 biennium is projected to be nearly $500 million. A projected $324 million will be available for TERP programs and administration, after the statutorily required transfer of no less than 35% of the fund to the Texas Highway Fund for the Texas Department of Transportation (TXDOT) to implement congestion mitigation projects.

TERP Program Highlights

OPEN NOW

Texas Natural Gas Vehicle Grant

Program (TNGVGP). Since 2012, TNGVGP has provided $54,012,006 in grants for 140 projects replacing 1,145 vehicles. The TNGVGP is projected to reduce 1,668 tons of NOX emissions at an average cost of $32,372 per ton.

Propane was added to the program as an eligible fuel in 2017 during the 85th Texas Legislative Session. Since then, 24 grantees and 120 vehicles have been awarded $3.6 million in grants for propane autogas projects in Texas.

Due to past undersubscription, for 2022-2023, the TCEQ increased the grant amounts offered for TNGVGP projects to provide greater incentives for participation in the program.

The latest TNGVGP grant round opened October 14, 2022, with a projected

$32 million in available funding over the biennium. Eligible projects will be awarded on a first-come, first-served basis through March 31, 2023, or until all available funds are awarded. The Texas Natural Gas Vehicle Grant Program, popular for funding propane bobtails, school buses and medium duty vehicles, grant round for 20222023 will be ending soon, Don’t miss out on this grant that gives you the opportunity to apply now and buy by 2025.

Vehicle must operate at least one of these eligible counties in the Clean Transportation Zone 75% of the time: Anderson, Aransas, Atascosa, Bastrop, Bee, Bell, Bexar, Brazoria, Brazos, Burleson, Caldwell, Calhoun, Chambers, Collin, Colorado, Comal, Dallas, Denton, Dewitt, Duval, El Paso, Ellis, Falls, Fay- ette, Fort Bend, Freestone, Frio, Galveston, Goliad, Gonzales, Gregg, Grimes, Guadalupe, Hardin, Harris, Harrison, Hays, Henderson, Hill, Hood, Howard, Hunt, Hutchison, Jackson, Jefferson, Jim Wells, Johnson, Karnes, Kaufman, La Salle, Lavaca, Lee, Leon, Liberty, Limestone, Live Oak, Madison, Matagorda, Medina, McLennan, McMullen, Milam, Montgomery,Navarro, Nueces, Orange, Panola,Parker, Refugio, Robertson, Rockwall, Rusk, San Patricio, Smith, Tarrant, Titus, Travis, Upshur, Victoria, Walker, Washington, Webb, Wharton, Williamson, Wilson & Wise. quisition and installation of refueling infrastructure for grant eligible equipment.

Learn more at https://www.tceq.texas. gov/airquality/terp/tngvgp.html.

Diesel Emissions Reduction Incentive (DERI) Program. Since 2001, the Diesel Emissions Reduction Incentive Program has provided over $1.1 billion to replace or upgrade 20,450 vehicles and pieces of equipment. These projects will reduce NOX in the nonattainment areas and other affected counties by 189,151 tons.

Since 2001, the ERIG Program has provided $905,845,741 in grants for 5,652 projects. The ERIG Program is projected to reduce 156,281 tons of NOX emissions at an average cost of $5,796 per ton.

TCEQ opened the next ERIG grant round in February 2023, with an estimated $45 million in available funding over the biennium. TCEQ anticipates that the ERIG Program will be oversubscribed in FY 2022-2023. The deadline to apply for this program is April 4, 2023.

Eligible counties include: Anderson, Bastrop, Bexar Brazoria, Caldwell, Chambers, Collin, Comal, Dallas, Denton, El Paso, Ellis, Fort Bend, Freestone, Galveston, Gregg, Guadalupe, Hardin, Harris Harrison, Hays, Henderson, Hood, Howard, Hunt, Hutchinson, Jefferson, Johnson, Kaufman, Liberty, Montgomery, Navarro, Nueces, Orange, Panola, Parker, Rockwall, Rusk, San Patricio, Smith, Tarrant Titus, Travis, Upshur, Waller, Williamson, Wilson, and Wise.

Learn more about ERIG at https://www. tceq.texas.gov/airquality/terp/erig.html.

Waiting On Next Grant Round

Governmental Alternative Fueling Fleet (GAFF) Program. The GAFF Program provides grants to state agencies and political subdivisions, who operate a fleet of more than 15 vehicles, to help offset the difference in cost of purchasing a new alternative fuel or hybrid vehicle versus a traditional vehicle powered by diesel or gasoline.

Since its inception over 20 years ago, the Diesel Emissions Reduction Incentive Program (DERI) has funded 3,486 pieces of propane equipment, totaling $42,064,637 in grants, primarily for propane forklifts.

Emissions Reduction Incentive Grants (ERIG) Program. The ERIG Program part of DERI provides grants for the lease or purchase, replacement, repower, or retrofit of non-road equipment like forklifts, heavy-duty on-road vehicles, marine vessels (e.g. commercial fishing boats, tugboats), line-haul & switcher locomotives, and stationary equipment. Grants may also be available for the ac-

Since 2021, the Governmental Alternative Fueling Fleet Program has provided $6 million in grant funds to one governmental entity for the purchase of vehicles and refueling infrastructure.

LPG Success Story. Last grant round, out of the 24 applicants, only one applicant won the entire $6 million pot, that was Cy-Fair ISD, who received funding for 80 propane school buses and LPG refueling infrastructure for those buses.

TCEQ anticipates opening the next GAFF Program grant round in Spring 2023, with an estimated $4 million in available funding over the biennium. TCEQ anticipates that the GAFF Program will be oversubscribed in FY 2022-2023.

Learn more about the GAFF program at https://www.tceq.texas.gov/airquality/ terp/gaff.

Texas Clean Fleet Program

(TCFP).

The TCFP provides grants to owners of at least 75 vehicles in Texas to replace a minimum of 10 diesel vehicles with new alternative-fuel or hybrid vehicles. Eligible alternative fuels include liquefied petroleum gas (LPG) and other alt fuels.

Since 2010, the TCFP has provided $69,363,635 in grants for 37 projects. The TCFP is projected to reduce 704 tons of NOX emissions at an average cost of $98,594 per ton.

LPG Success Story. Of those 37 proj- ects, 19 of them were for propane, funding 356 vehicles and totaling over $21 million for propane.

The latestTCFP grant round was open fromJuly18,2022,andranthroughSeptember 16, 2022, with a projected $16 million in available funding over the biennium. TCEQ received 12 applications requesting a total of $24,477,683.

Learn more about this program at https://www.tceq.texas.gov/ airquality/terp/tcf.html.

Alternative Fueling Facilities Program (AFFP). The AFFP, established under THSC Chapter 393, provides grants for the construction, reconstruction, or acquisition of public and private facilities to store, compress, or dispense alternative fuels including propane. Since 2012, the Alternative Fueling Facilities Program has provided over $31 million to construct or expand 311 propane, alternative fuel, or electric charging facilities.

LPG Success Story. Over the course of 10 years, the AFFP funded 58 propane refueling station projects totaling $1,086,727 in the Clean Transportation Zone, eighty plus county area in Texas.

The program closed in July of 2022 and a new grant round has not yet been announced.

Learn more about this program at https://www.tceq.texas.gov/airquality/ terp/ctt.html.

Light-Duty Motor Vehicle Purchase or Lease Incentive Program. TCEQ administered the Light-Duty Motor Vehicle Purchase or Lease Incentive Program after the Texas Legislature reinstated the program in 2017. The program has provided over $16 million in rebates for the purchase or lease of lightduty alternative fuel including propane and EVs.

This is one of the few statewide programs providing $5,000 per propane vehicle including bi-fuel conversions. This underutilized program has only awarded $45,000 in propane vehicle rebates over the last few years. The program has strict convert under 500 miles provision and the requirement to purchase the vehicle within the state of Texas that has had a hand in hampering viable applications. The 2022 round recently closed on January 7, 2023, and 2022 applications are not included in that total.

Learn more about this program at https://www.tceq.texas.gov/airquality/ terp/ld.html.

Texas Clean School Bus Program (TCSB). Since 2008, the Texas Clean School Bus Program has provided over $53 million, including over $4 million in federal funds, to retrofit or replace 7,860 school buses in Texas.

The program only recently started allowing for school bus replacements versus tailpipe retrofits. Since its expansion in 2018, school districts have been awarded $2.3 million in grants for propane school buses. The latest TCSB Program grant round closed this October 2022. In 2022, propane accrued quite a lot under the program, over $1.5 million to include: Georgetown ISD received $385,700.00+$332,500.00, Hays CISD received $332,500.00, Dickinson ISD received $199,500.00, Roby ISD received $172,900.00 and both Alvin ISD and Denton ISD received $66,500 all for propane school buses.

Learn more about this program at https://www.tceq.texas.gov/airquality/ terp/school-buses.html.

Rebate Grants Program. The Rebate Grants Program provides a streamlined and simplified process for the submission and approval of grants for projects to reduce NOx emissions from heavy-duty on-road diesel vehicles and non-road diesel equipment.

Since 2006, the Rebate Grants Program has provided $208,674,493 for 3,221 projects. The Rebate Grants Program is projected to reduce 22,852 tons of NOx emissions at an average cost of $9,131 per ton.

The Rebate Grants Program is part of the DERI Program and propane has thrived under this program in the past.

The latest Rebate Grants Program grant round closed in November 2022 and its next grant round has not been announced.

Learn more about the Rebate Grants Program at https://www.tceq.texas.gov/ airquality/terp/rebate.html.

Seaport and Rail Yard Areas Emissions Reduction Program (SPRY). Since 2015, the SPRY program has provided over $28 million to replace 363 drayage vehicles and pieces of cargo handling equipment operating at seaport and rail yard facilities in nonattainment areas. These projects will reduce NOx in those nonattainment areas and other affected counties by 1,303 tons.

Since the program was started, $75,000 in off-road propane equipment was funded through Seaport and Rail Yard Areas Emissions Reduction Program.

The program recently closed in November 2022 and a new grant round has not been announced yet.

Learn more about this program at https://www.tceq.texas.gov/airquality/ terp/spry.

Take Advantage of Grants

Are you interested in taking advantage of one of these grants? TPGA and ProCOT are here to help! Reach out to our contracted grant experts to help you understand the grant process, evaluate if you qualify and complete the grant paperwork.

Contact our TPGA/ProCOT grant expert and advisor Heather Ball at 512-4848535 or at heather@txng.org. She is here to help you navigate this process and take advantage of these incredible opportunities.

2023 & Beyond

Clean air stakeholders have big plans for TERP in 2023. Stay tuned to the TPGA members only Monday Morning Messenger for legislative plans for TERP this Texas Legislative Session.

This article was created from the Texas Emissions Reduction Plan Biennial Report (2021-2022) Report to the 88th Texas Legislature and historical reports found at https://www.tceq.texas.gov/airquality/terp.