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Texas Incentives and Laws

Listed below are the summaries of all current Texas incentives, laws, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• State Incentives (13)
• Utility/Private Incentives (8)
• Laws and Regulations (9)

State Incentives

Alternative Fueling Infrastructure Grants

Effective September 1, 2011, the Texas Commission on Environmental Quality will establish and administer the Alternative Fueling Facilities Program, part of the Texas Emissions Reduction Plan, which provides grants for 50% of eligible costs, up to $500,000, to construct, reconstruct, or acquire a facility to store, compress, or dispense alternative fuels in Texas air quality nonattainment areas. Qualified alternative fuels include electricity, natural gas, hydrogen, propane, and fuel mixtures containing at least 85% methanol (M85). The entity receiving the grant must agree to make the fueling station available to people and organizations not associated with the grantee during certain times. Additional terms and conditions apply. This program ends August 31, 2018. (Reference Senate Bill 20, 2011, and Texas Statutes, Health and Safety Code 394)

Natural Gas Vehicle (NGV) and Fueling Infrastructure Grants

Effective September 1, 2011, the Texas Commission on Environmental Quality (CEQ) will establish and administer the NGV Grant Program, part of the Texas Emissions Reduction Plan, which provides grants to replace existing medium- and heavy-duty vehicles with new, converted, or repowered NGVs. Qualifying vehicles must be on-road vehicles with a gross vehicle weight rating of more than 8,500 pounds and certified to current federal emissions standards. Grant funds may cover only the incremental costs. Additional terms and conditions apply.

To ensure that NGVs have access to natural gas fueling infrastructure, CEQ may also award grants to support the development of a network of natural gas fueling stations along the interstate highways connecting Houston, San Antonio, Dallas, and Forth Worth. Through a competitive process, CEQ may not award more than three station grants to any one entity, or more than one grant for each station. Grant amounts may not exceed $100,000 for a compressed natural gas station, $250,000 for a liquefied natural gas station, or $400,000 for a station providing both forms of natural gas. Funded stations must be accessible to the public and located within three miles of an interstate highway system. Additional terms and conditions apply.

This program ends August 31, 2017. (Reference Senate Bill 20, 2011, and Texas Statutes, Health and Safety Code 393)

Clean Vehicle and Infrastructure Grants

The Texas Commission on Environmental Quality administers the Emissions Reduction Incentive Grants (ERIG) Program, part of the Texas Emissions Reduction Plan, which provides grants for various types of clean air projects to improve air quality in the state's nonattainment areas. Eligible projects include those that involve heavy-duty vehicle replacement, retrofit, or repower; alternative fuel dispensing infrastructure; idle reduction and electrification infrastructure; and alternative fuel use. As of July 2011, the latest ERIG application period has closed. (Reference Texas Statutes, Health and Safety Code 386)

Alternative Fuel and Advanced Vehicle Research and Development Grants

The Texas Council on Environmental Quality administers the New Technology Research and Development (NTRD) Program, part of the Texas Emissions Reduction Plan, which provides grants for alternative fuel and advanced technology demonstration and infrastructure projects to encourage and support research, development, and commercialization of technologies that reduce pollution. As of July 2011, the latest NTRD grant application period has closed. (Reference Texas Statutes, Health and Safety Code 387)

Clean Fleet Grants

The Texas Commission on Environmental Quality (TCEQ) administers the Texas Clean Fleet Program, part of the Texas Emissions Reduction Plan, which encourages owners of fleets containing diesel vehicles to permanently remove the vehicles from the road and replace them with alternative fuel vehicles (AFVs) or hybrid electric vehicles (HEVs). Grants are available to fleets to offset the incremental cost of such replacement projects. An entity that operates a fleet of at least 100 vehicles and places 25 or more qualifying vehicles in service for use entirely in Texas during a given calendar year may be eligible for grant. Qualifying AFV or HEV replacements must reduce emissions of nitrogen oxides or other pollutants by at least 25% as compared to baseline levels and must replace vehicles that meet operational and fuel usage requirements. Neighborhood electric vehicles do not qualify. This program ends August 31, 2017. As of July 2011, the latest grant application period has closed. (Reference Texas Statutes, Health and Safety Code 391)

Renewable Fuel Production Grants

Qualified producers may be eligible for grants of $0.20 for each gallon of ethanol, biodiesel, or renewable diesel, or $0.20 for each MMBtu of renewable methane, produced from renewable resources. The grant is available to registered producers for up to 18 million gallons or MMBtu per fiscal year at any one production facility. (Reference Senate Bill 1303, 2011, and Texas Statutes, Agriculture Code 16.001, 16.002, and 16.006)

Heavy-Duty Natural Gas Vehicle (NGV) Grants

The Texas General Land Office administers the NGV Initiative Grant Program to encourage public-sector fleets in certain counties to increase their use of heavy-duty NGVs. Private fleets also may be eligible particularly those that operate directly under contract for government work or do other government business. The program is funded with a Texas Emissions Reduction Plan grant through the Texas Commission on Environmental Quality. A variety of vehicles, including street sweepers, forklifts, buses, and garbage trucks, are eligible for grants to help cover the cost of replacing diesel vehicles with NGVs. The program ends August 31, 2012. As of July 2011, funding is not available.

Natural Gas Fuel Rates and Alternative Fuel Promotion

Through its natural gas program, the Texas General Land Office (GLO) makes competitively-priced natural gas available to school districts and other state and local public entities for use in natural gas vehicles. The GLO has also established an alternative fuels program to aggressively promote the use of alternative energy sources, especially for those fuels abundant in Texas. The GLO alternative fuels program serves as a liaison between government and industry.

Propane Vehicle Replacement Grants

The Railroad Commission of Texas, Alternative Energy Division's Low Emissions Propane Equipment Initiative Program offers grants to buyers who wish to replace aging medium-duty diesel school bus or delivery vehicles with qualified propane vehicles that meet or exceed current U.S. Environmental Protection Agency (EPA) emissions standards. The grant amount is dependent upon the calculated emissions reductions. The Alternative Energy Division also offers incentives to buyers who wish to replace aging internal combustion forklifts with new propane forklifts that meet or exceed 2008 EPA emissions standards.

Propane Vehicle Training

The Railroad Commission of Texas, Alternative Energy Division, offers free safety and maintenance training on propane vehicles, buses, and forklifts.

Clean Vehicle Replacement Vouchers

The Texas Commission on Environmental Quality administers the AirCheckTexas Drive a Clean Machine program, which provides vehicle replacement assistance for qualified individuals owning vehicles registered in participating counties. Vouchers in the amount of $3,500 are available toward the purchase of a hybrid electric, battery electric, or natural gas vehicle that is up to three model years old. For more information about participating counties, qualified vehicles, and program requirements, see the AirCheckTexas Drive a Clean Machine website. (Reference House Bill 3272, 2011, and Texas Statutes, Heath and Safety Code 382.209)

Diesel Fuel Blend Tax Exemption

The biodiesel or ethanol portion of blended fuel containing taxable diesel is exempt from the diesel fuel tax. The biodiesel or ethanol fuel blend must be clearly identified on the retail pump, storage tank, and sales invoice in order to be eligible for the exemption. (Reference Texas Statutes, Tax Code 162.204)

Idle Reduction Weight Exemption

Any vehicle equipped with qualifying idle reduction technology may exceed the state's gross vehicle weight limits by up to 400 pounds to compensate for the additional weight of the idle reduction technology. Upon request, vehicle operators must provide proof that the idle reduction technology is fully functional. (Reference Senate Bill 493, 2011, and Texas Statutes, Transportation Code 622.955)

Utility/Private Incentives

Electric Vehicle Supply Equipment (EVSE) Incentive - Coulomb Technologies

Coulomb Technologies' ChargePoint America program offers EVSE at no cost to individuals or entities in the Austin metropolitan area. To be eligible for a public or commercial charging system, an entity must be located within the Austin metropolitan area and in defined potentially "high use" areas, and provide public access to the charging system. Companies and municipalities may apply on the ChargePoint America Web site. To be eligible for free home charging stations, individuals living within the specified area must purchase a qualified electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV). Individuals purchasing an eligible EV or PHEV should apply for the ChargePoint America program at the dealership or with the vehicle manufacturer at the time of vehicle purchase. In most cases, installation will be paid for by the EVSE owner; some cities, states, and utilities, however, will provide funding towards installation costs. All participants in the ChargePoint America program must agree to anonymous data collection after installation. Additional restrictions may apply.

Electric Vehicle Supply Equipment (EVSE) Incentive - ECOtality

Through the EV Project, ECOtality offers EVSE at no cost to individuals in the Dallas, Fort Worth, and Houston metropolitan areas. To be eligible for free home charging stations, individuals living within the specified areas must purchase a qualified electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV). Individuals purchasing an eligible EV or PHEV should apply at the dealership at the time of vehicle purchase. The EV Project incentive program will also cover most, if not all, of the costs of EVSE installation. All participants in the EV Project incentive program must agree to anonymous data collection after installation. Additional restrictions may apply.

Electric Vehicle Supply Equipment (EVSE) Incentive - Austin Energy

Plug-in electric vehicle owners in the Austin Energy service area may be eligible for a rebate of 50% of the cost to purchase and install a qualified Level 2 charging station. The maximum rebate amount is $1,500. For additional information, see the Austin Energy Plug-In Partners website.

Electric Vehicle Supply Equipment (EVSE) Incentive - CPS Energy

For a limited time, CPS Energy and the City of San Antonio are offering qualified CPS Energy customers a rebate of 50% of the cost of Level 2 residential EVSE. The maximum rebate amount is $1,000 for a single-family home. Rebates will be available on a first come, first served bases until the funds for the program are exhausted. A maximum of 50 rebates are available. For more information, see the CPS Energy Electric Vehicle Charger Rebates website.

Natural Gas Fuel Rate Reduction and Infrastructure Maintenance - Clean Energy

Clean Energy Fuels offers services to the natural gas vehicle industry that include compressed natural gas fueling station equipment maintenance and competitive fuel pricing for larger fleet customers, as well as alternative fuel vehicle financing.

Natural Gas Vehicle (NGV) and Fueling Infrastructure Rebates - Texas Gas Service

The Texas Gas Service Conservation Program offers a $2,000 rebate for the purchase of a qualified NGV or $3,000 for the conversion of a gasoline powered vehicle to operate on natural gas. The rebate is available for up to five vehicles per customer, and only centers certified by the Railroad Commission of Texas may perform conversions. A $1,000 rebate is also available for the purchase of a natural gas forklift. Additionally, qualified residential and commercial NGV fueling infrastructure may be eligible for a $2,000 rebate. These incentives are available to commercial and residential customers within the city limits of Austin, Sunset Valley, Rollingwood, West Lake Hills, Cedar Park, and Kyle with specific gas rate codes.

Natural Gas Infrastructure Technical Assistance - Atmos Energy

Atmos Energy offers preliminary feasibility studies for compressed natural gas fueling stations and may assist with vendor selection on a case-by-case basis.

Natural Gas Infrastructure Technical Assistance - CenterPoint Energy

CenterPoint Energy offers preliminary feasibility studies for compressed natural gas fueling stations and may assist with vendor selection on a case-by-case basis within the CenterPoint Energy service area.

Laws and Regulations

Alternative Fuel Use and Vehicle Acquisition Requirements

State agency fleets with more than 15 vehicles, excluding emergency and law enforcement vehicles, may not purchase or lease a motor vehicle unless the vehicle uses compressed or liquefied natural gas, propane, ethanol or fuel blends of at least 85% ethanol (E85), methanol or fuel blends of at least 85% methanol (M85), biodiesel or fuel blends of at least 20% biodiesel (B20), or electricity including plug-in hybrid electric vehicles. Waivers may be granted for fleets under the following circumstances: 1) the fleet will operate primarily in areas where neither the state agency or a supplier can reasonably be expected to establish adequate fueling infrastructure for these fuels, or 2) the agency is unable to obtain equipment or fueling facilities necessary to operate alternative fuel vehicles at a cost that is no greater than the net costs of using conventional fuels.

Covered state agency fleets must consist of at least 50% of vehicles that are able to operate on alternative fuels and use these fuels at least 80% of the time the vehicles are driven. Covered state agencies may meet these requirements through the purchase of new vehicles or the conversion of existing vehicles. State agencies that purchase passenger vehicles or other ground transportation vehicles for general use must ensure that at least 25% of the vehicles purchased during any state fiscal biennium, other than exempted vehicles, meet or exceed federal Tier II, Bin 3 emissions standards.

(Reference Texas Statutes, Government Code 2158.004-2158.009)

Renewable Fuel Promotion

The Texas Bioenergy Policy Council and the Texas Bioenergy Research Committee were established to promote the goal of making biofuels a significant part of the energy industry in Texas by January 1, 2019. The Policy Council is tasked with the following: 1) provide a vision for unifying the state's agricultural, energy, and research strengths in a successful launch of a cellulosic biofuel and bioenergy industry; 2) foster development of cellulosic and bio-based fuels; 3) pursue the creation of a next-generation biofuels energy research program at a university in the state; 4) pursue federal and other funding to position the state as a bioenergy leader; 5) study the feasibility and economic development effect of a blending requirement for biodiesel or cellulosic fuels; 6) pursue the development and use of thermochemical process technologies to produce alternative chemical feedstocks; and 7) study the feasibility of the requirements for renewable natural gas. (Reference Texas Statutes, Agriculture Code 50D)

Fuel Dispenser Labeling Requirement

All equipment used to dispense motor fuel containing at least 1% ethanol or methanol must be clearly labeled to inform customers that the fuel contains ethanol or methanol. Equipment used to dispense motor fuel containing at least 10% ethanol or 5% methanol must also state the percentage of ethanol or methanol. Motor fuel dealers must inform customers of ethanol and methanol fuel content upon request. (Reference Texas Statutes, Agriculture Code 17.051)

Renewable Fuel Production Fee

Ethanol, biodiesel, renewable diesel, and renewable methane producers are subject to a fee of $0.032 per gallon of liquid fuel or MMBtu of gaseous fuel produced at each registered production facility, limited to 18 million gallons or MMBtu produced at any one facility. (Reference Senate Bill 1303, 2011, and Texas Statutes, Agriculture Code 16.001 and 16.005)

Provision for Establishment of Hydrogen Program

The Texas Department of Transportation (TxDOT) may seek funding from public and private sources to acquire and operate hydrogen vehicles and establish and operate publicly-accessible hydrogen fueling stations. TxDOT must ensure that data on emissions from the vehicles, fueling stations, and related hydrogen production are monitored and compared with data on emissions from control vehicles with internal combustion engines that operate on fuels other than hydrogen. TxDOT must report the results of this monitoring, analysis and comparison to the Texas Commission on Environmental Quality. (Reference Texas Statutes, Transportation Code 201.618)

Idle Reduction Requirement

A vehicle may not idle for more than five minutes from April through October in cities and counties where the local government has signed a Memorandum of Agreement with the Texas Commission on Environmental Quality (CEQ). Exemptions apply for the following: vehicles with a gross vehicle weight rating (GVWR) of 14,000 pounds (lbs.) or less; traffic conditions; emergency or law enforcement; to perform needed work; maintenance or diagnostics; defrost windshield; airport ground support; rented/leased vehicles; and hours of service compliance. Vehicles may idle for up to 30 minutes for bus passenger comfort or transit operations. Fines vary by jurisdiction.

CEQ may not prohibit or limit the idling of any vehicle with a GVWR greater than 8,500 lbs., provided that the vehicle is equipped with a 2008 or subsequent model year heavy-duty diesel or natural gas engine that is certified by the U.S. Environmental Protection Agency or another state agency to emit no more than 30 grams of nitrogen oxides per hour when idling.

(Reference Senate Bill 493, 2011; Texas Statutes, Health and Safety Code 382.0191; and Texas Administrative Code 30.114.510-30.114.517)

Neighborhood Electric Vehicle (NEV) Access to Roadways

NEVs are defined as vehicles that can attain a maximum speed of 35 miles per hour (mph) and that must comply with the safety standards in Title 49 of the Code of Federal Regulations, section 571.500. NEVs may only be used on roadways that have a posted speed limit of 45 mph or less except to cross at an intersection. A county, municipality, or the Texas Department of Transportation may prohibit the operation of NEVs on a street or highway if the governing body determines that the prohibition is necessary in the interest of safety. (Reference Texas Statutes, Transportation Code 551.301-551.303)

Propane Tax

Motor fuel taxes for propane used in vehicles are collected through an annual sticker permit fee based on the vehicles' registered gross vehicle weight rating and the number of miles driven the previous year. (Reference Texas Statutes, Tax Code 162.305)

Propane and Natural Gas Safety

The Railroad Commission of Texas regulates the safety of the natural gas and propane industries. (Reference Texas Statutes, Natural Resources Code 113.011 and 116.011)