Public Citizen Testimony in Support of HB 4519 — Efficiency Updates to the Texas Emissions Reduction Plan (TERP)
To: Chairman Brooks Landgraf and the Members of the House Committee on Environmental Regulation
CC: Vice-Chair Claudia Ordaz, Rep. Rafael Anchía, Rep. Keith Bell, Rep. Ben Bumgarner, Rep. Penny Morales Shaw, Rep. Tom Oliverson, Rep. Ron Reynolds, Rep. Steve Toth
Via hand delivery and by email.
From: Adrian Shelley, Public Citizen, ashelley@citizen.org, 512-477-1155
Re: HB 4519, Texas Emissions Reduction Plan (TERP) – Public Citizen testimony in support
Dear Chairman Landgraf and Members of the Committee:
On behalf of 30,000 members and supporters in Texas, Public Citizen appreciates the opportunity to testify in support of HB 4519, relating to programs established and funded under the Texas emissions reduction plan. We support this bill because it makes efficiency updates to the TERP program without significantly changing allocations to valuable programs.
Why TERP?
The Texas Emissions Reduction Plan (TERP) was created in 2001 as an incentive-based program to reduce air pollution from aging combustion-engine vehicles. TERP’s continued success is due to a number of factors:
- The need to reach attainment of federal Clean Air Act standards, particularly the ozone National Ambient Air Quality Standard (NAAQS).
- The cost-effectiveness of TERP at reducing nitrogen oxide (NOx) emissions, which are the driver of ozone pollution.
- The incentive-based approach to reducing emissions from mobile sources (cars and trucks).
- The lessened obligation on stationary sources—industrial facilities, primarily in the oil and gas industry—to reduce their air pollution.
- The dramatic benefit to public health of reducing air pollution.
Air pollution nonattainment is expensive.
Since it’s amendment in 1990, the Clean Air Act has been one of the most important public health statutes in the United States. Public health benefits of the Clean Air Act exceed costs by 30 to 1, with $65 billion in investment resulting in $2 trillion in public health benefit since 1990.1
These numbers may seem unbelievable, but they are backed by decades of data. Globally, air pollution kills 7 million people each year.2 The most deadly type of air pollution—particulate matter (including dust and soot)—is responsible for 90% of these health impacts. In Texas alone, fossil fuel burning releases particulate matter pollution that kills 17,000 Texans each year.3
Texas is motivated to reduce ozone pollution and meet federal standards.
In Texas our focus has been on reducing ozone pollution. Throughout most of the history of the Clean Air Act Texas’ urban areas have been in nonattainment of the various National Ambient Air Quality Standards (NAAQS) for ozone.
Houston, for example, has not met an ozone pollution standard since their introduction in 1979. The economic consequences for the region have reached into the billions of dollars.
A 2015 study by the Capital Area Council of Governments estimated that an ozone nonattainment designation would cost Central Texas between $0.9 – $1.4 billion annually for up to three decades, for a total cost of $24 to $41 billion.4
Ozone is not emitted directly by sources of pollution. It forms in the atmosphere through a reaction with sunlight, nitrogen oxides (NOx) and volatile organic compounds (VOCs). Time, experience, and chemistry have shown that recuing NOx pollution is the best way to combat ozone pollution.
TERP was introduced in 2001 as a voluntary, incentive-based program to reduce nitrogen oxide (NOx) pollution from mobile sources. TERP has succeeded due to its cost-effectiveness and the benefits it provides.
TERP remains the most cost-effective way to reduce ozone pollution.
The Diesel Emissions Reduction Incentive Grant (DERI) is the “workhorse” TERP program to which the most funds have been allocated. It is also the most cost effective program. The most recent biennial report on the TERP program to the legislature included these recent numbers for the DERI program:5
- $71,430,864 per year projected allocation in FY 2024-2025.
- $44,172.54 per ton of NOx reduced in the FY 2022-2023 biennium.
- DERI program lifetime NOx reduced: 191,063 tons.
As this chart shows, the lifetime cost of DERI is $7,193 per ton of NOx reduced:6
HB 4519 updates TERP programs without significant changes to program allocations.
We support HB 4519 because it makes updates to the TERP program that will increase its efficiency without making significant changes to allocations across programs. The bill consolidates several existing TERP programs:
- Alternative fueling facilities program
- Natural gas vehicle program
- Seaport and railyard program (although we understand the committee substitute reverts this back to an independent program)
- Hydrogen infrastructure, vehicle, and equipment program
These programs are consolidated in revised Health and Safety Code Chapter 392, the Texas Clean Fleet Program.
We hope this consolidation will reduce administrative costs and direct more money into these programs. We also appreciate the flexibility between programs that this consolidation creates. The natural gas vehicle program has been historically undersubscribed. This consolidation will allow unspent funds from that program to go to other programs within the consolidated Texas Fleet Clean Program. Previously, those unused funds were applied to the DERI program. DERI is a well-funded and successful program, but spreading more funds across programs will diversify TERP’s uses and benefits.
HB 4519 does not change the allocation to the popular light-duty purchase or lease incentive (LDPLIP) program. This program has consistently demonstrated that purchasers of passenger vehicles want electric—not natural gas—vehicles.7
TxDOT’s use of TERP funds is not cost effective.
When the TERP Fund was created outside of the budget process, 35% of TERP funds were transferred to TxDOT for the Congestion Mitigation Air Quality (CMAQ) program.8 In FY 2024 the total transfer was $101,507,599.9
This money funded 15 highway projects and realized 15.9 tons of nitrogen oxides (NOx) reduction. This gives CMAQ a cost effectiveness of $6,389,201 per ton of NOx reduced in 2024.
By comparison, the DERI program cost $44,172.54 per ton of NOx reduced in the FY2022-2023 biennium, and $7,193 per ton of Nox over the lifetime of the program beginning in 2001.10
This means that DERI is still 144 times more cost effective than CMAQ. The legislature should end the TxDOT transfer and return TERP money to its intended purpose of reducing air pollution from mobile sources through incentive-based programs.
Recommendations to improve the bill.
We have a few improvements to suggest for the bill.
First, the option to invest in particulate matter reductions should be made clear throughout the statute. As mentioned above, although ozone nonattainment has driven investment in pollution reductions in Texas for decades, it is particulate matter that causes 90% of health impacts.
In Central Texas the public health impacts of fine particulate matter (PM2.5) pollution alone exceed $3.4 billion:11
We recommend making clear throughout the program that TERP funds can be used to reduce particulate matter pollution. For example, at P. 12, L. 10 we recommend adding “and particulate matter” after the word “nitrogen.” Similarly, the various qualification requirements refer to reductions of oxides of nitrogen of at least 25%–we suggest expanding this to include particulate matter.
Second, we support leaving the seaport and rail yards program out of the consolidation. We understand the committee substitute should do this.
Third, we recommend ending the TxDOT transfer for the Congestion Mitigation Air Quality [sic] (CMAQ) program.
In conclusion, we ask you to support HB 4519 because it makes updates to the successful Texas Emissions Reduction Plan (TERP) program. We support further updates that focus on programs that cost-effectively reduce air pollution, including particulate matter.