Texas Biodiesel Laws and Incentives
State Incentives
Clean Vehicle and Equipment Grants
The Texas Emissions Reduction Plan (TERP) provides grants for various types of clean air projects in 41 counties to improve air quality in the state's non-attainment areas. Grants are available to purchase, convert, or repower on- and off-road vehicles and equipment. For complete information on the types of projects and expenses that may be eligible for a grant, refer to the TERP Web site. (Reference Texas Statutes, Health and Safety Code 386)
Alternative Fuel Grants
The Texas Emissions Reduction Plan (TERP) provides grants for alternative fuel and advanced technology demonstration and infrastructure projects under the New Technology Research and Development (NTRD) Program, which provides incentives to encourage and support research, development, and commercialization of technologies that reduce pollution. For more information, see the NTRD Program Web site.The NTRD Program is administered by the Texas Environmental Research Consortium, with support from the Houston Advanced Research Center from 2006 to 2009. The Texas Commission on Environmental Quality will assume administration in 2010. (Reference Texas Statutes, Health and Safety Code 386)
Ethanol, Biodiesel, and Renewable Diesel Production Grants
Grants are available to qualified producers in the amount of $0.20 for the portion of ethanol, biodiesel, or renewable diesel produced from renewable resources in each gallon of fuel for each registered plant for up to ten years for and up to 18 million gallons per fiscal year. (Reference House Bill 2582, 2009, and Texas Statutes, Agriculture Code 16.001 and 16.005)
Clean School Bus Program - North Central Texas
The North Central Texas Clean School Bus Program (Program) is a fuel and technology neutral program, administered by the North Central Texas Council of Governments, serving a 16-county service area. The Program serves as a clearinghouse for information on technology, legislation, best-practices for school bus operators, and clean school bus funding opportunities. The Program aims to reduce emissions from school bus fleets by encouraging and assisting in the expedited purchase of clean school buses as well as adoption and enforcement of idle reduction policies. In addition, the Program seeks to gather community resources to assist schools, school districts, and school bus operators in improving air quality and protecting the health of school-aged children.
Alternative Fuel Vehicle (AFV) Grants - Houston-Galveston
Congestion Mitigation and Air Quality (CMAQ) Program Grants are available through the Houston-Galveston Area Council, via the Greater Houston Clean Cities Coalition, for up to 75% of the incremental cost of purchasing new original equipment manufactured clean fuel vehicles, clean fuel vehicle conversions/repowers, or establishing publicly accessible alternative fueling infrastructure. This grant is for government and private entities in the eight-county Houston-Galveston non-attainment area.
State Laws and Regulations
Alternative Fuel Use Required in State Fleets
State 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 natural gas, liquefied natural gas, liquefied petroleum gas, methanol or methanol-gasoline blends of 85% or greater (M85), ethanol or E85, biodiesel or B20 and higher blends, 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 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.
By September 30, 2010, covered state agency fleets must consist of at least 50% vehicles that use alternative fuels as listed above and use these fuels not less than 80% of the time the vehicle is driven.
Furthermore, state agencies authorized to 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. Covered state agencies may meet these requirements through the purchase of new vehicles or the conversion of existing vehicles.
(Reference House Bill 432, 2009, and Texas Statutes, Government Code 2158.001, 2158.0013, and 2158.003 to 2158.009)
Biofuels 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 Senate Bill 1016, 2009, and Texas Statutes, Agriculture Code 50D)
Ethanol, Biodiesel, and Renewable Diesel Production Fee
Ethanol and biodiesel producers are subject to a fee of $0.032 per gallon of ethanol or biodiesel produced in each registered production facility, imposed by the Texas Department of Agriculture. (Reference House Bill 2582, 2009, and Texas Statutes, Agriculture Code 16.001 and 16.005)
Ethanol and Biodiesel 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)
