# Presentation: 328928

## Texas Emissions Reduction Plan(TERP)Texas Commission on Environmental Quality

## What is the TERP?

- TERP was created in 2001 by SB 5
- Amended in 2003 by HB 1365
- Voluntary incentives for projects to reduce emissions of nitrogen oxides (NOx) in the nonattainment and near-nonattainment areas of Texas

## Funding Revenues

- Emissions Reduction Incentive Grant Program Revenue Estimates:
- FY2005 - $127,378,125
- Anticipate next Request for Applications in summer 2004
- FY2006 - $129,810,625
- FY2007 - $132,815,375
- FY2008 - $135,165,625

## Fundingbased on new HB 1365

- Average of about $130 million per fiscal year through 2008
- Statewide 2.5% fee on the sale or lease of on-road diesel vehicles greater than 14,000 lb – 1996 and older
- Statewide 1% fee on the sale or lease of on-road diesel vehicles greater than 14,000 lb – 1997 or newer

## Fundingbased on new HB 1365

- Vehicle Title Transfer
- $20 in “affected counties”*
- $15 in all other counties
- Statewide 10% surcharge on registration of commercial vehicles
- Statewide $10 surcharge on inspection of commercial vehicles
- Statewide 2% fee on the sale and lease of off-road diesel construction equipment
- * “Affected Counties” include the 41 counties located in a nonattainment or near-nonattainment area.

## Two Main Programs

- Emissions Reduction Incentive Grants
- New Technology Research & Development Program

## New Technology Research & Development Program

- Grants for research, development, testing, certification, and demonstration of new technologies
- $10 - $15 million per fiscal year

## Emissions Reduction Incentive Grants

## Counties Eligible for Grant Funding

- Bastrop, Bexar, Brazoria, Caldwell, Chambers, Collin, Comal,
- Dallas, Denton, Ellis, El Paso, Fort Bend,
- Galveston, Gregg, Guadalupe, Hardin, Harris,
- Harrison, Hays, Jefferson, Johnson,
- Kaufman, Liberty, Montgomery, Nueces, Orange, Parker,
- Rockwall, Rusk, San Patricio, Smith, Tarrant, Travis, Upshur,
- Victoria, Waller, Williamson, Wilson
*Counties added by HB 1365 include: ****Henderson, Hood, Hunt****. *

## Incremental Costs

- Grant programs pay for the incremental cost of cleaner equipment
- Example:
- The cost to purchase a diesel excavator is $200,000
- The cost to purchase an excavator with a reduced-emission engine is $215,000.
- TERP might pay $15,000 towards the purchase of the cleaner equipment

## Eligible Projects

- New Purchases and Leases
- Repowers of existing vehicles and equipment
- Retrofit and Add-On of devices to vehicles and equipment
- Replacement of old vehicles and equipment with new or newer models
- Infrastructure for qualifying fuel
- On-site electrification and idle reduction infrastructure
- On-vehicle electrification and idle reduction infrastructure
- Incremental costs for qualifying fuel purchases
- Demonstration Projects (not currently being accepted)
- All projects, except demonstration and infrastructure projects, must meet a cost effectiveness threshold of $13,000 per ton of NOx reduced.

## New Purchase or Lease

- Non-road equipment limited to 25 hp or greater
- On-road vehicles with GVWR of 8,500 lb and greater
- Limited to equipment which is self propelled and/or capable of being moved
- Recreational and competitive equipment excluded
- Will cover the incremental cost between the baseline and the cleaner equipment cost
- Will cover cleaner equipment regardless of the fuel type
- Equipment must operate 75% of the time in an affected county
- Must be 25% cleaner for NOx than current year’s standard
- Must not exceed $13,000/ton of NOx reduced

## Repower of Existing On-Roadand Non-Road Equipment

- Repowers with engines that are at least 25% cleaner than the engine being replaced.
- Old engine must be scrapped. TCEQ will consider trade-in arrangements, if the dealer can convince us that the engine will be removed from Texas and not returned.
- Must meet $13,000 per ton cost effectiveness threshold.

## Retrofit or Add-On

- At the time of rebuild, retrofitting the engine with a “kit” that will allow it to achieve a 25% reduction from where the engine was originally certified
- Adding on equipment to an existing engine which allow it to achieve a 25% reduction from where the engine was originally certified
- Must meet the $13,000/ton threshold

## New Project Category“Replacement”

- Replace old vehicle or equipment with new or newer vehicles or equipment.
- New vehicle or equipment must be 25% cleaner for NOx than the old vehicle or equipment.
- Old vehicle or equipment must be scrapped. TCEQ will consider trade-in arrangements, if the dealer can convince us that the vehicle/equipment and engine will be removed from Texas and not returned.
- Incentive amount based on cost effectiveness, not to exceed cost of replacement vehicle or equipment, minus scrappage value.

## New Equipment Category“Stationary Equipment”

- Stationary equipment with engines 25 hp or greater.
- Projects may include: lease/purchase; replacement; repower; retrofit/add-on; infrastructure; and qualifying fuel.
- Many stationary engines are already covered by a rule or permit requirement imposing standards on emissions.  Agricultural equipment is exempted from most of these standards.  The eligibility of other types of equipment will need to be considered on a case-by-case basis.

## Infrastructure Projects

- Will pay for the costs of on-site refueling stations for qualifying fuel
- Will pay for the costs of on-site electrification (charging stations) and idle reduction infrastructure
- Will pay for the costs of on-vehicle infrastructure projects to reduce propulsion engine emissions (idle emissions)
- No longer must meet the $13,000/ton threshold

## Qualifying Fuels Projects

- Will pay for the incremental cost difference between a conventional fuel and a qualifying fuel
- Contracts limited to 2 1⁄2 years due to state fiscal policies, but there’s no limit on applying for future grants
- Must meet the $13,000/ton threshold

## Demonstration Projects

- Projects for demonstrating practical low emission re-power, retrofit and other advanced technologies for on-road heavy-duty vehicles and off road equipment
- May include use of qualifying fuels for new engines and vehicles which have the potential to produce very low NOx emissions
- Will pay for most costs associated with the project limited to a case by case determination

## New Grant Mechanism“Small Business” Grants

- Small businesses are defined as an entity that owns only two vehicles or equipment, one of which is either a pre-1994 vehicle or non-road equipment with an uncontrolled engine.
- Initially, limited to repower and replacement grants for the eligible vehicles or equipment.
- First-come-first-served processing.

## Technologiesfunded to date

- 	Some of the technologies funded to date, and which may be considered in the future, include:
- New purchases of equipment with engines cleaner than current standards
- Repower with cleaner new or remanufactured engines
- Retrofit to alternative fuel operation
- Retrofit with EGR system + Particulate Filter
- Retrofit with SCR system
- Use of Emulsified Diesel
- Use of Texas Low Emission Diesel

## TCEQ Contact Information

- Web Site
- _[http://www.terpgrants.org](http://www.terpgrants.org/)_
- For detailed information about the grants program, contact:
- Mr. Steve Dayton at (512) 239-6824
- 	E-Mail: _[sdayton@tceq.state.tx.us](mailto:sdayton@tceq.state.tx.us)_
- Mr. Steve Hutchinson at (512) 239-1331
-     (for information on small business grants)
- 	E-Mail: _[shutchin@tceq.state.tx.us](mailto:shutchin@tceq.state.tx.us)_
- Mr. Mark Sims at (512) 239-1413
- 	E-Mail: _[msims@tceq.state.tx.us](mailto:msims@tceq.state.tx.us)_