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What Is the Texas Emission Reduction Plan (TERP)?

Why do we need to clean the air, and how can the TERP programs help.

Why do we need to clean the air?

In Texas and across the nation, air pollution is a problem. Many cities and communities in the eastern half of Texas, along with El Paso, are not meeting the air quality standards that have been established by the United States Environmental Protection Agency (EPA). Other cities in the eastern region of our state are on the verge of failing to meet these EPA standards.

Everyday activities, such as driving a vehicle and operating industrial equipment, contribute to the creation of two types of pollutants—nitrogen oxides (NOX) and volatile organic compounds (VOCs). These pollutants combine readily in hot, stagnant air to form ground-level ozone, which, in high concentrations, can cause shortness of breath, coughing, wheezing, headaches, nausea, and throat and lung irritation.

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What is the TERP?

The Texas Emissions Reduction Plan (TERP) was established by the 77th Texas Legislature in 2001, through enactment of Senate Bill (SB) 5 Exit the TCEQ. The TERP includes a number of voluntary financial incentive programs, as well as other assistance programs, to help improve the air quality in Texas.

The goals of the TERP, as set forth in SB5, are to:

  • assure that the air in this state is safe to breathe and meets minimum federal standards established under the Federal Clean Air Act (42 U.S.C. section 7407);
  • develop multipollutant approaches to solving the state’s environmental problems; and
  • adequately fund research and development that will make the state a leader in new technologies that can solve its environmental problems while creating new business and industry in the state.

In addition to these general goals, a primary purpose of the TERP is to replace, through voluntary incentive programs, the reductions in emissions of oxides of nitrogen that would have been achieved through two mandatory measures that SB5 directed the TCEQ to remove from the State Implementation Plan (SIP) for the Dallas–Fort Worth (DFW) and Houston-Galveston (HGA) ozone nonattainment areas. Those reductions totaled 35.2 tons per day (tpd), to be achieved in 2007. The two strategies that were removed were:

  • a limit on the use of construction and industrial equipment from 6 a.m. to 10 a.m. and
  • a requirement that the owners and operators of diesel-powered construction, industrial, commercial, and lawn and garden equipment 50 hp and above replace their affected equipment with newer Tier 2 and Tier 3 equipment within certain designated deadlines.

It was also envisioned that TERP incentives could be used to achieve up to an additional 20 tpd of NOX reductions, out of 56 tpd of reductions remaining to be identified in the SIP for the HGA area.

Incentive funding was also expected to be available to help achieve reductions in counties located in the other two nonattainment areas (Beaumont–Port Arthur and El Paso County) and in designated near-nonattainment areas, where air quality is approaching nonattainment levels.

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What programs are included in the TERP?

The TERP includes a number of new financial-incentive and assistance programs intended to address the goals of the plan. These programs are administered by a number of different state agencies, and address various aspects of the plan.

  • Emissions Reduction Incentive Grants Program

    The Emissions Reduction Incentive Grants Program is administered by the TCEQ. The program provides grants to eligible projects in affected counties to offset the incremental cost associated with the activities to reduce emissions of NOX from high-emitting mobile diesel sources in nonattainment areas and other affected counties of the state.

  • Rebate Grants Program

    The Rebate Grants Program is a simplified application process under the Emissions Reduction Incentive Grants Program. Rebate grants are only available for diesel on-road and non-road replacement and repower projects. In addition, part of the funds allocated to the Rebate Grants Program will be set aside for applications from entities that qualify as a Small Business under the TERP Guidelines for Emissions Reduction Grants. Thus, small businesses are encouraged to apply.

  • ARRA Rebate Grants Program

    The American Recovery and Reinvestment Act (ARRA) Rebate Grants Program is a simplified first-come, first-serve grant program to upgrade or replace heavy-duty vehicles and/or non-road equipment. On-road replacement vehicles may be powered by diesel, natural gas, or propane. Non-road projects may only replace a diesel engine with a diesel engine.

  • Texas Clean Fleet Program

    The Texas Clean Fleet Program offers grants to replace heavy-duty and light-duty on-road diesel vehicles with alternative fuel and hybrid vehicles.

  • New Technology Research and Development Program

    The New Technology Research and Development Program (NTRD) provides financial incentives to encourage and support research, development, and commercialization of technologies that reduce pollution in Texas through the issuance of state funded grants.

  • New Technology Implementation Grants Program

    The New Technology Implementation Grant (NTIG) program was established by House Bill 1796 (81st Legislative Session) in 2009. The primary purpose of this grant program is to offset the incremental cost of emission reductions of pollutants, from facilities and other stationary sources in Texas.

  • Clean School Bus Program

    Health and Safety Code 390.002 requires the TCEQ to establish and administer a clean school bus program. Grants fund projects to help reduce the exposure of school children to diesel exhaust from school buses. Projects may include diesel oxidation catalysts, diesel particulate filters, and emissions-reducing add-on equipment.

  • Heavy-Duty Motor Vehicle Purchase or Lease Incentive Program

    The Heavy-Duty Motor Vehicle Purchase or Lease Incentive Program is a statewide program also administered by the TCEQ. Under this program, the TCEQ may reimburse a purchaser or lessee of a new on-road heavy-duty (over 10,000-lb.) vehicle for incremental costs of purchasing or leasing the vehicle in lieu of a higher-emitting diesel-powered vehicle. The vehicle being purchased or leased must be certified by the U.S. Environmental Protection Agency (EPA) to meet certain designated lower emissions standards for NOX.

  • Light-Duty Motor Vehicle Purchase or Lease Incentive Program

    The Light-Duty Motor Vehicle Purchase or Lease Incentive (LDPLI) Program is a statewide program to provide financial incentives (rebates) for the purchase or lease of an eligible new car and light truck, model year 2003 or newer. To be eligible, the vehicles must meet the U.S. Environmental Protection Agency’s Tier 2 Bin 4 or cleaner NOX emissions standards and must have been purchased or leased after August 1, 2002. The rebates are subject to available funding. The incentive program is administered by the Texas Comptroller of Public Accounts.

    The Comptroller is to establish a program to administer the application for and payment of the incentives for eligible vehicles. The Comptroller must track the incentives and report to the TCEQ on the status of the program.

    In addition, other agencies and vehicle manufacturers are responsible for assisting the Comptroller with parts of the program, including:

    • Manufacturers’ Report and List of Eligible Motor Vehicles. Not later than July 1 of each year, manufacturers must provide to the TCEQ a list of new vehicle models that the manufacturer intends to sell in the state during that model year that meet the incentive emissions standards. On August 1 of each year, the TCEQ is to publish and provide to the Comptroller a list of motor vehicles that qualify for the incentive.
    • Low-Emissions Vehicle Insignia for Certain Motor Vehicles. At the time of registration or re-registration, TxDOT is to issue a specially designed “low-emissions vehicle” insignia for a motor vehicle that meets the qualifications for the incentive program. The TCEQ sponsored a contest in the state’s public schools to select a student design for the insignia—
      Picture of winning clean vehicle logo.

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  • Energy Efficiency Programs

    Texas Building Energy Performance Standards Exit the TCEQ

    To achieve energy conservation in residential construction, the TERP included adoption of the energy-efficiency chapter of the International Residential Code as the energy code in Texas for single-family residential construction. For all other residential, commercial, and industrial construction, the International Energy Conservation Code was adopted as the energy code for use in Texas.

    The Energy Systems Laboratory at the Texas Engineering Experiment Station of the Texas A&M University System is responsible for helping municipalities and counties determine the relative impacts of local amendments to the codes, and to report to the TCEQ on the status and effect of the local codes.

    Energy Efficiency Programs in Certain Political Subdivisions Exit the TCEQ

    Under the TERP, affected counties and political subdivisions, other than a school district, in a nonattainment area or in an affected county are asked to implement energy-efficiency measures and to establish a goal to reduce the electric consumption by the political subdivision by five percent each year for five years, beginning January 1, 2002.

    Affected political subdivisions are to report annually to the Texas Comptroller’s State Energy Conservation Office (SECO) regarding the political subdivision’s efforts and progress. SECO is to provide assistance and information to political subdivisions to help in meeting the goals of the program.

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