1. 1 Texas Emissions Reduction Plan (TERP) Texas Commission on Environmental Quality August 4, 2004 TERP Advisory Board Meeting

2. 2 Overview  TERP was created in 2001 by SB 5 (77th Texas Legislature)  Focus is on voluntary incentives for projects to reduce emissions of nitrogen oxides (NOx) in the nonattainment and near-nonattainment areas of Texas.  The program was amended in 2003 by HB 1365 (78 th Texas Legislature) Added Small Business Grant Program Increased types of eligible sources and projects Provided for new revenues

3. 3 TERP Programs  Chapter 386 Emissions Reduction Incentive Grant Program (TCEQ) Small Business Grants Program (TCEQ) Heavy-Duty Motor Vehicle Purchase or Lease Incentive Program (TCEQ) Light-Duty Motor Vehicle Purchase or Lease Incentive Program (TCEQ and Comptroller) Energy Efficiency Grant Program (PUC)  Chapter 387 New Technology Research and Development Program (TCEQ)  Chapter 388 Texas Building Energy Performance Standards (Lab) Energy Efficiency Programs in Certain Political Subdivisions (SECO)

4. 4 Legislative Report Contents  Summary of projects funded with TERP funds  Accounting of the use of funds  Status of Plan in achieving emission reductions credited in air quality plans  Summary of administrative processes  Program adjustments made since last report and necessary legislative recommendations necessary to improve the Plan

5. 5 Funding (FY02 – June 30, 2004)  Surcharge on off road equipment - $34.7 million  Surcharge on heavy-duty on-road vehicles - $16.1 million  10% fee on commercial motor vehicle registrations - $22.5 million  $225 fee for inspection of out-of-state vehicles - $0  Portion of vehicle title fees - $87.7 million  $10 fee on commercial vehicle inspections - $10.1 million  Fund balance interest - $1.8 million

6. 6 Emissions Reduction Incentive and Small Business Projects Funded to Date (Sept. 1, 2001 - June 30, 2004 ) Area$ AwardedProjected NOx reductions (tons) Projected NOx reductions (Tons/Day) Average Cost per ton/NOx Total$41,819,6957,179.83474.6558$5,736 AUS$514,42341.17080.0107$12,495 BPA$400,000120.25000.0962$3,326 CC$15,4323.30290.0026$4,672 DFW$10,753,8642,638.07201.5886$3,186 ELP$1,475,000327.34130.1637$5,632 HGA$23,544,5893,141.37492.3257$7,261 SAT$5,116,387908.3228.4682$5,632

7. 7 Small Business Projects Only (as of June 30, 2004) Area$ AwardedProjected NOx reductions (tons) Projected NOx Reduction s (tons/day) Average Cost per ton/NOx DFW$104,5319.24641.8493$12,345 SAT$38,5003.27920.6558$12,820

8. 8 FY04 2 nd Round Selected Projects (as of July 26, 2004) Area No. of ProjectsGrant AmountProjected NOx Reductions (tons) Projected NOx reductions (Tons/day) Average Cost per ton/NOx Total203$80,894,36713,573.879.55$5,960 AUS43$6,069,179871.910.59$6,961 BPA7$2,181,910426.480.29$5,116 CC4$1,907,996275.350.22$6,929 DFW93$29,693,9835564.123.78$5,337 ELP2$457,018113.900.09$4,012 HGA43$36,408,5185690.893.72$6,398 SAT5$2,547,923388.590.26$6,557 TYL2$799,450122.740.10$6,513 VIC4$828,390119.890.51$6,910

9. 9 FY05 Program  Staff working on allocation approaches for Commissioners’ Work Session on August 16 th  Eligibility criteria for Emissions Reduction Incentive Grant Program - $7,000/ton; for Small Business Grants Program - $8,500  Funding cap for infrastructure projects at 50%  Ensure minimal risk to state funds when funding start-up businesses  Continue funding lease projects  Continue to work with public entities on 3 rd party grants; no private entities for FY05

10. 10 Estimated Future Revenue for Emissions Reduction Incentive and Small Business Grants Programs  FY2005 - $127.4 million  FY2006 - $129.8 million  FY2007 - $132.8 million  FY2008 - $135.2 million

11. 11 New Technology Research and Development Estimated Future Revenue  FY2005 - $13.8 million  FY2006 - $14.2 million  FY2007 - $14.5 million  FY2008 - $14.7 million

12. 12 What is the NTRD?  The Texas Council on Environmental Technology (TCET) was created in 2001 by SB 5 to implement NTRD  Assist in developing solutions to air water waste problems  Funded 15 projects totaling $2.4 million  NTRD Program was formally transferred to TCEQ in 2003, by HB 37

13. 13 New Technology Research & Development Program  Retrofit/add-on technologies targeted by the TERP  Advanced technologies for new engines  Studies and modeling  Advanced technologies that promote building and appliance energy performance  Advanced technologies that reduce emissions from other significant sources.

14. 14 Fiscal Year 2004  Primary objective to fund : Emissions-reducing technologies May be eligible for funding under Chapter 386 (TERP)  74 applications - requesting approximately $60 million in funding  17 projects selected for $8.3 million

15. 15 NTRD Funding for Fiscal Year 2004

16. 16 NTRD Funded Projects for Fiscal Year 2004 $ AwardedNumber of Projects Total$8.3 Million17 Retrofit/add-on technologies targeted by the TERP $ 4,347,3697 Advanced technologies for new engines $ 1,633,6282 Studies and modeling $ 687,4392 Advanced technologies that promote building and appliance energy performance $00 Advanced technologies that reduce emissions from other significant sources. $1,385,6353 *Qualifying fuel projects $ 295,3223 *TERP Related

17. 17 Fiscal Year 2005 Applications  Primary objective to fund : Emissions-reducing technologies May be eligible for funding under Chapter 386 (TERP)  104 applications - requesting approximately $73.6 million in funding  Currently in the review process