The Texas Commission on Environmental Quality (TCEQ) offers grants through the Texas Emissions Reduction Plan (TERP) that help construction companies replace or repower older diesel equipment with cleaner alternatives. Excavators, bulldozers, loaders, generators, and other heavy construction equipment are eligible for these programs, which can cover a substantial portion of the upgrade cost.
TERP Programs for Construction Equipment
- Diesel Emissions Reduction Incentive (DERI): Grants covering up to 80% of the incremental cost of replacing or repowering eligible diesel construction equipment. Eligible equipment includes excavators, backhoes, bulldozers, wheel loaders, skid steers, cranes, generators, compressors, and other non-road diesel equipment.
- Emissions reduction retrofit program: Grants for installing verified emissions reduction technologies on existing equipment, such as diesel particulate filters and diesel oxidation catalysts.
Eligible Equipment
TCEQ grants cover non-road diesel equipment commonly used in construction:
- Excavators and backhoes
- Bulldozers and graders
- Wheel loaders and skid steer loaders
- Cranes and forklifts
- Generators and air compressors
- Concrete pumps and pavers
- Off-road dump trucks and haul trucks
Equipment must typically be a certain age or older (often Tier 0, 1, or 2 engines) and must operate primarily in Texas, with priority given to equipment operating in nonattainment areas.
Grant Amounts
- Replacement grants: Cover up to 80% of the incremental cost of a new piece of equipment versus the old one. For example, replacing a $30,000 older excavator with a $120,000 Tier 4 Final model could yield a grant covering up to $72,000 of the $90,000 incremental cost.
- Repower grants: Cover the cost of installing a new, cleaner engine in existing equipment
- Retrofit grants: Cover the cost of emissions reduction devices installed on existing engines
Geographic Priority
TCEQ prioritizes equipment operating in areas with air quality challenges. The Houston-Galveston-Brazoria, Dallas-Fort Worth, San Antonio, Austin, and El Paso regions typically receive priority funding. Construction companies operating equipment across multiple regions should check county-level eligibility for each piece of equipment.
Application Process
- Monitor TCEQ for open grant rounds — these programs are not continuously open
- Inventory your equipment to identify eligible units (check engine tier, model year, and horsepower)
- Prepare operating data showing annual hours and primary operating location
- Submit application during the open period
- If approved, complete the replacement or retrofit within the specified timeframe and submit documentation
Complementary Programs
- Section 179 depreciation: New equipment purchases may qualify for accelerated federal tax depreciation regardless of TCEQ grant participation
- Texas sales tax manufacturing exemption: Construction equipment used in certain manufacturing-like processes may qualify for sales tax exemption
- SBA 504 loans: For financing equipment purchases alongside TCEQ grants. SBA 504 guide.
- General construction grants: Full construction grants guide.
Bottom Line
TCEQ grants through TERP offer Texas construction companies a practical way to offset the cost of upgrading aging diesel equipment. The grants are competitive and periodic, so monitoring TCEQ announcements and maintaining an equipment inventory ready for application is the best way to position your company for funding.
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