Texas Laws and Incentives
Listed below are the summaries of all current Texas laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:
Alternative Fueling Infrastructure Grants
The Texas Commission on Environmental Quality (TCEQ) administers the Alternative Fueling Facilities Program (AFFP) as part of the Texas Emissions Reduction Plan. AFFP provides grants for 50% of eligible costs, up to $600,000, to construct, reconstruct, or acquire a facility to store, compress, or dispense alternative fuels in Texas air quality nonattainment areas. Qualified alternative fuels include biodiesel, 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, 2017. Funds are not currently available for fiscal year 2015-2016 (verified July 2015). For more information, see the TCEQ Alternative Fueling Facilities Program website. (Reference Texas Statutes, Health and Safety Code 386 and 393 and Texas Administrative Code 114.660-114.662)
Natural Gas Vehicle (NGV) and Fueling Infrastructure Grants
The Texas Commission on Environmental Quality (TCEQ) administers the NGV Grant Program (Program) as part of the Texas Emissions Reduction Plan. The Program 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 must be certified to current federal emissions standards. Grant funds may cover only the incremental costs. Applicants must apply through a participating dealer under contract with TCEQ. The Program has $12.4 million available annually (verified July 2015). Additional terms and conditions apply. For more information, see the TCEQ NGV Grant Program website.
To ensure that NGVs have access to natural gas fueling infrastructure, TCEQ may also award grants through the Clean Transportation Triangle Program 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, TCEQ may not award more than one grant for each station. Grant amounts may not exceed $400,000 for a compressed natural gas station, $400,000 for a liquefied natural gas station, or $600,000 for a station providing both forms of natural gas. Funded stations must be accessible to the public and located within one mile of an interstate highway system. Additional terms and conditions apply. Funds are not currently available for fiscal year 2015-2016 (verified July 2015). For more information, see the TCEQ Clean Transportation Triangle Program website.
These programs end August 31, 2017.
Clean Vehicle and Infrastructure Grants
The Texas Commission on Environmental Quality (TCEQ) administers the Emissions Reduction Incentive Grants (ERIG) Program as part of the Texas Emissions Reduction Plan. The ERIG Program 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 replacement, retrofit, repower, or lease or purchase of new heavy-duty vehicles; alternative fuel dispensing infrastructure; idle reduction and electrification infrastructure; and alternative fuel use. Funds are not currently available for fiscal year 2015-2016 (verified July 2015). For more information, including funding availability, see the TCEQ Emissions Reduction Incentive Grants (ERIG) Program website. (Reference Texas Statutes, Health and Safety Code 386)
Clean Fleet Grants
The Texas Commission on Environmental Quality (TCEQ) administers the Texas Clean Fleet Program (TCFP) as part of the Texas Emissions Reduction Plan. TCFP 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 75 vehicles, including at least 20 diesel-powered vehicles, and that commits to placing 20 or more qualifying vehicles in service for use entirely in Texas during a given calendar year may be eligible. 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, and is restricted to certain counties. Funds are not currently available for fiscal year 2015-2016 (verified July 2015). For more information, including current application periods, see the TCEQ Texas Clean Fleet Program website. (Reference Texas Statutes, Health and Safety Code 386 and 392 and Texas Administrative Code 114.650-114.658)
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 Texas Statutes, Health and Safety Code 382.209-220)
Clean School Bus Program
Any school district or charter school may receive a grant through the Texas Commission on Environmental Quality (TCEQ) to pay for the incremental costs to install diesel oxidation catalysts, diesel particulate filters, emission-reducing add-on equipment, and other emissions reduction technologies in qualified school buses. Furthermore, funds may also be used to purchase qualifying fuels, including any liquid or gaseous fuel or additive registered or verified by the U.S. Environmental Protection Agency (other than standard gasoline or diesel) that provides particulate matter emission reductions. The program expires on August 31, 2019. Additional rules and conditions apply. Funds are not currently available for fiscal year 2015-2016 (verified July 2015). For more information, see the TCEQ Clean School Bus Program website. (Reference Texas Administrative Code 114.640-114.648)
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 Texas Statutes, Transportation Code 622.955)
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 EVSE. The maximum rebate amount is $1,500. For additional information, see the Austin Energy Plug-In Rebate website.
Natural Gas Vehicle (NGV) and Fueling Infrastructure Rebates - Texas Gas Service
The Texas Gas Service Conservation Program offers a rebate of up to $2,000 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 rebate of $1,000 is also available for the purchase of a natural gas forklift. Additionally, qualified residential and commercial NGV fueling infrastructure may be eligible for a rebate of up to $1,500. These incentives are available to commercial and residential customers within the city limits of Austin, Bee Cave, Lakeway, Sunset Valley, Rollingwood, West Lake Hills, Cedar Park, and Kyle with specific gas rate codes. For more information, see the Texas Gas Service Natural Gas Vehicles website.
Point of Contact
CNG Specialist, Business Development
Texas Gas Service
Phone: (512) 370-8239
Fax: (512) 370-8247
Liquefied Petroleum Gas (Propane) Vehicle and Equipment Incentive - Propane Council of Texas
Propane vehicle incentives are available to private fleets with three or more vehicles that have not previously used propane as motor fuel. New dedicated propane vehicles and aftermarket conversions are eligible for an incentive equal to the incremental cost, up to $7,500. Each fleet is limited to $15,000 in total incentive awards.
Additionally, an incentive up to $1,000 is available for each new or converted propane commercial mower operated by public and private entities (excluding state agencies). Applicants are limited to five incentive awards.
All conversion systems for vehicles and mowers must be certified through the U.S. Environmental Protection Agency or the California Air Resources Board. Incentives must be coordinated through participating dealers and installers the Railroad Commission of Texas licenses to sell, install, or service propane systems, vehicles, and commercial mowers. All vehicles and mowers must be registered and operated in Texas. Additional terms and conditions apply. For more information, see the Propane Council of Texas website.
Laws and Regulations
Alternative Fuel Vehicle (AFV) Registration Tracking Program
Beginning September 1, 2016, the Texas Department of Transportation (TxDOT) must develop a program to collect data on the number of AFVs registered in the state. TxDOT must submit an annual report to the Texas Legislature detailing the results of each data collection year. For the purpose of this program, AFVs include plug-in electric vehicles, hybrid electric vehicles, and natural gas vehicles. (Reference House Bill 735, 2015, and Texas Statutes, Transportation Code, 502-004)
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: 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 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 through 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:
- Provide a vision for unifying the state's agricultural, energy, and research strengths in a successful launch of a cellulosic biofuel and bioenergy industry;
- Foster development of cellulosic and bio-based fuels;
- Pursue the creation of a next-generation biofuels energy research program at a university in the state;
- Pursue federal and other funding to position the state as a bioenergy leader;
- Study the feasibility and economic development effect of a blending requirement for biodiesel or cellulosic fuels;
- Pursue the development and use of thermochemical process technologies to produce alternative chemical feedstocks; and
- Study the feasibility of the requirements for renewable natural gas.
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. (Reference Texas Statutes, Agriculture Code 17.051)
Natural Gas Vehicle (NGV) Inspection Requirements
To pass the state vehicle inspection, an NGV owner must be able to provide proof that the fuel tank on the vehicle has met inspection requirements and falls within the manufacturer's recommended service life, as required by Title 49 of the U.S. Code of Federal Regulations, section 571.304. Fleet operators must also be able to prove that a certified technician inspected the vehicle's fuel tank. (Reference Texas Statutes, Transportation Code 548.104)
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 (TCEQ). Exemptions apply for the following: vehicles with a gross vehicle weight rating (GVWR) of 14,000 pounds (lbs.) or less; emergency or law enforcement vehicles; airport ground support vehicles; rented/leased vehicles; to perform needed work, including maintenance and diagnostics; to defrost a windshield; traffic conditions; and hours of service compliance activities. Vehicles may idle for up to 30 minutes for bus passenger comfort or transit operations. Fines vary by jurisdiction.
TCEQ 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.
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 U.S. 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 through 551.304)
Natural Gas Tax
Compressed natural gas (CNG) and liquefied natural gas (LNG) dispensed into a motor vehicle is taxed at a rate of $0.15 per gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE), depending on how the dispenser lists the price. A GGE is defined as 5.66 pounds (lbs.) of CNG or 5.37 lbs. of LNG. A DGE is defined as 6.380 lbs. of CNG or 6.06 lbs. of LNG. Exemptions may apply. (Reference Texas Statutes, Tax Code 162.001, and 162.351 through 162.356)
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. Exemptions apply for transit and interstate vehicles. (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)