The Texas Commission on Environmental Quality (TCEQ) administers several grant and rebate programs that help trucking companies replace older diesel vehicles and engines with cleaner alternatives. These programs — funded primarily through the Texas Emissions Reduction Plan (TERP) — can cover a significant portion of the cost of upgrading trucks, trailers, and auxiliary equipment.
TERP Programs for Trucking Companies
The Texas Emissions Reduction Plan includes several programs relevant to trucking operations:
- Diesel Emissions Reduction Incentive (DERI): Grants for replacing or repowering heavy-duty diesel vehicles and equipment. Trucking companies can receive grants to replace older Class 7 and Class 8 trucks with newer, cleaner models. Grant amounts vary but can cover up to 80% of the incremental cost difference between the old and new vehicle.
- Texas Natural Gas Vehicle Grant Program (TNGVGP): Grants for purchasing or leasing new natural gas vehicles or converting existing vehicles to natural gas. Relevant for fleets considering CNG or LNG conversions.
- Light-Duty Motor Vehicle Purchase or Lease Incentive (LDPLIP): While primarily for lighter vehicles, fleets with pickup trucks and service vehicles may qualify.
Eligible Activities
- Replacing older diesel trucks (typically model year 2009 or older) with newer, cleaner diesel or alternative fuel trucks
- Repowering existing trucks with newer, cleaner engines
- Installing verified diesel emission reduction technologies (diesel oxidation catalysts, particulate filters, etc.)
- Purchasing or converting to natural gas, propane, or electric vehicles
- Replacing or upgrading auxiliary power units (APUs) and transport refrigeration units (TRUs)
Geographic Eligibility
TCEQ programs prioritize vehicles operating in areas with air quality concerns. Counties in and around major metro areas — including Houston-Galveston-Brazoria, Dallas-Fort Worth, San Antonio, Austin, and El Paso — typically receive priority. However, some TERP programs are available statewide. Check current program guidelines for specific county eligibility.
Grant Amounts and Cost Share
- DERI grants: Typically cover up to 80% of the incremental cost of upgrading to a cleaner vehicle or engine. For a $180,000 new truck replacing a $40,000 trade-in, the incremental cost might be $140,000, with a grant covering up to $112,000.
- TNGVGP grants: Cover a portion of the incremental cost of natural gas vehicles versus comparable diesel vehicles
- Activity life requirements: Grant recipients must operate the replacement vehicle in Texas for a specified period (typically 5 to 7 years) and meet annual usage requirements
Application Process
- Monitor TCEQ's website for open grant rounds (programs open periodically, not continuously)
- Verify that your vehicles and operating area qualify
- Submit an application during the open period with vehicle details, operating data, and project specifications
- If approved, purchase the replacement vehicle or complete the retrofit within the specified timeframe
- Submit documentation and destroy or permanently disable the old vehicle as required
Complementary Programs
- EPA Diesel Emissions Reduction Act (DERA): Federal grants administered separately from TERP, sometimes available through regional clean air organizations
- Section 179 depreciation: New truck purchases may qualify for accelerated federal tax depreciation
- General trucking grants: Full guide to trucking grants in Texas.
- SBA 7(a) loans: For financing fleet purchases alongside TCEQ grant funding. SBA 7(a) guide.
Bottom Line
TCEQ grants through the TERP program can significantly reduce the cost of fleet upgrades for Texas trucking companies. The grants are competitive and open periodically, so planning ahead and monitoring TCEQ announcements is essential. For companies operating older diesel trucks in Texas metro areas, these grants represent one of the most direct financial incentives available for fleet modernization.
Not sure which programs may fit your trucking business? Our free screening report checks your business against 150+ verified programs — grants, tax credits, loans, and incentives — and shows you which ones may match. Start your free screening →