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Texas Natural Gas Vehicle Grant Program (TNGVGP)

The TNGVGP provides grants to encourage an entity that owns and operates a heavy-duty or medium-duty motor vehicle to repower the vehicle with a natural gas engine or replace the vehicle with a natural gas vehicle.

A Program of the Texas Emissions Reduction Plan (TERP)

No Longer Accepting Comments

TCEQ is no longer accepting comments for the FY 2022-2023 TERP TNGVGP grant round. Comments received by the TCEQ and TCEQ’s response to those comments are provided at the links below.

The information on this page is for reference only and will be updated with the final program requirements and grant documents upon the opening of the program.

application/pdfEn Español

The TNGVGP provides grants to encourage an entity that owns and operates a heavy-duty or medium-duty motor vehicle powered by diesel or gasoline to replace the vehicle with a natural gas vehicle or repower the vehicle with a natural gas engine. Grants may reimburse up to 90% of the incremental cost of the new vehicle and engine.

  • A heavy-duty vehicle has a gross vehicle weight rating (GVWR) greater than 8,500 pounds (lbs.) and is certified to, or has an engine certified to, the United States (US) Environmental Protection Agency (EPA) emissions standards for heavy-duty vehicles or engines.
  • A medium-duty vehicle has a GVWR greater than 8,500 lbs. and is certified to, or has an engine certified to, the US EPA light-duty emissions standards.

The proposed eligibility and award criteria for the upcoming TNGVGP grant round are described below. TCEQ requests written comments on these criteria be submitted by email to TERP-comments@tceq.texas.gov no later than September 1, 2022, at 5:00 pm CST. Any responses to comments will be posted on the TERP website at www.terpgrants.orgExit the TCEQ. TCEQ has sole discretion as to whether to respond to comments. TCEQ may not reply to comments received after September 1, 2022.

Final requirements for TNGVGP projects will be published in the TNGVGP Request for Grant Applications upon the opening of the program.

Eligible Applicants

  • Individuals and entities operating a heavy-duty or medium-duty vehicle in Texas.
    • Business entities such as corporations or partnerships must have an active registration with the Texas Secretary of State by the date of the grant round opening. Businesses must maintain an active registration during the contract period if awarded a grant.

Eligible Project Categories

  • Replacement of Vehicles Owned, Registered, and Operated by the Applicant
    • Replacement of vehicles owned, leased, or otherwise commercially financed and registered and operated by the applicant in Texas for the two years immediately preceding the application signature date;
    • In operating condition with at least two years of remaining useful life; and
    • Applicants must certify that they have legal authority to destroy the vehicle being replaced.
  • Replacement of Fleet Vehicles Registered in the application/pdfClean Transportation Zone (CTZ)
    • Replacement of vehicles currently owned by the Applicant;
    • Owned, leased, or otherwise commercially financed and operated in Texas as a fleet vehicle for at least the two-year period immediately preceding the application signature date;
    • Registered in a county located in the application/pdfCTZ for at least the two years immediately preceding the application signature date;
    • In operating condition with at least two years of remaining useful life; and
    • Applicants must certify that they have legal authority to destroy the vehicle being replaced.
  • Repower of Vehicles Owned, Registered and Operated by the Applicant
    • The replacement of the engine on an existing vehicle owned, leased, or otherwise commercially financed and registered and operated by the applicant in Texas for at least the two years immediately preceding the application signature date; and
    • At the time of repowering, the vehicle is in operating condition with at least two years of remaining useful life.

Waivers (replacement projects only)

An applicant may submit a request to waive one or more of the ownership, registration, or operation requirements listed above. TCEQ will review waiver requests on a case-by-case basis. Requests for waivers may include short lapses in registration or operation due to economic conditions, seasonal work, or other circumstances.

Qualifying Replacement Vehicles and Engines

TCEQ will publish and regularly update a list of qualifying replacement vehicles and engines that meet program requirements. An applicant may also request to add vehicles or engines to the list of qualifying vehicles when submitting an application.

  • For replacement projects, the qualifying vehicle must be:
    • A new or used vehicle that receives not less than 60% of its power from compressed natural gas (CNG), liquefied natural gas (LNG), or liquefied petroleum gas (LPG);
    • Certified by the US EPA to the current federal emissions standards or a lower family emissions limit (FEL);
    • Certified by the US EPA to emit at least 25% less nitrogen oxides (NOx) than the vehicle being replaced; and
    • Of the same weight classification and used in the same application or vocation as the vehicle being replaced.
  • For repower projects, the qualifying replacement engine or conversion system must be:
    • A new engine or conversion system certified to receive not less than 60% of its power from CNG, LNG, or LPG;
    • Certified by the US EPA to the current federal emissions standards or a lower FEL;
    • Certified by the US EPA to emit at least 25% less NOx than the engine being replaced; and
    • Approved by the US EPA for installation on the vehicle/engine being converted.

Non-Qualifying Replacement Vehicles and Engines

  • A vehicle or engine does not qualify if it:
    • Can operate independently on either natural gas or another fuel;
    • Has been used as a qualifying vehicle for a grant under this program for a previous reporting period or by another entity; or
    • Has received a similar grant or tax credit for the vehicle or engine.
  • For replacement projects, a vehicle does not qualify if:
    • The model year is 2016 or older; or
    • The model year is more than six years older than the current model year at the time of the application signature date.

Determining Grant Amounts

  • Grantees will receive the lesser amount of either:
    • The standardized grant amounts set by TCEQ in the application/pdfMaximum Grant Amount Tables; or
    • Ninety percent (90%) of the incremental cost (the eligible costs associated with the qualifying vehicle minus scrappage value).
      • TCEQ will use a scrappage value of $1,000 for replacement projects and $250 for repower projects to calculate grant awards.
  • Eligible costs for replacement projects:
    • The cost (or if leased, the capital lease cost basis) of the grant-funded vehicle, including:
      • Taxes and government fees;
      • Delivery and shipping fees;
      • Factory and/or extended warranties;
      • Service contracts;
      • Mechanic and safety inspections;
      • Cooperative fees; and
      • Dealer processing fees not related to financing.
  • Eligible costs for repower projects:
    • The cost to purchase and install the replacement engine, including but not limited to the cost of:
      • The new engine or conversion system, including taxes, duty, protective in-transit insurance, and freight charges;
      • Replacement of the existing engine with the natural gas engine or for converting the existing engine to run on natural gas including the purchase and installation of the natural gas fueling system and tanks; and
      • Removal and disposal of the old engine (if required), re-engineering the vehicle for the new engine to fit, technical design, testing, and other engineering services required as part of the installation work.

Application Review and Selection

  • TCEQ will consider funding for applications on a first-come, first-served basis.
  • TCEQ will award at least 60% of the total amount of the grants in the fiscal biennium to vehicles with a GVWR of at least 33,001 pounds, if a sufficient number of applications are received.

Grant Commitments

  • Vehicle Disposition (destruction). The vehicle and/or engine being replaced must be rendered permanently destroyed and inoperable within 90 days of receiving reimbursement from the TCEQ. Applicants can request at the time of application, the permanent removal of vehicle(s) from Texas in lieu of destruction. TCEQ will approve permanent removal only for the export of vehicle(s) to a destination outside of North America (United States, Canada, and United Mexican States).
  • Operation of the Grant-Funded Vehicle for Four Years or 400,000 miles. The grant-funded vehicle must be owned, leased, or otherwise commercially financed, and registered for four years or 400,000 miles. At least 75% of the annual use of the grant-funded vehicle must occur in one or more of the counties listed under the application/pdfCTZ during that time.

For More Information contact TERP staff at terp@tceq.texas.gov or 800-919-TERP (8377).