About the Area Emission Reduction Credit Organization (AERCO)

About AERCO Board of Directors

The governing body of the Houston-Galveston AERCO Board of Directors includes 18 members appointed by the H-GAC Board. AERCO legislation requires the membership of the AERCO Board to include representation from each of the counties in the non-attainment area, and from each of five groups: general public; large industry; small regulated business; environmental; and economic development. These groups are defined as follows:

  • General public includes local citizens, members of citizen groups or neighborhood associations not affiliated with one or more of the other represented groups and elected local officials. 
  • Large industry includes industrial permitted stationary sources emitting equal to or greater than 100 tons per year of ozone precursor pollutants. 
  • Small regulated business includes small sources that have standard exemptions or are permitted for emissions of less than 100 tons per year of ozone precursor pollutants and small business associations. 
  • Environmental includes environmental professional and members of environmental interest groups. 
  • Economic development includes chambers of commerce, area associations, economic development foundations and economic development professionals affiliated with cities, counties, profit or non-profit organizations. 

Members are appointed, given the above representation requirements, with due consideration of the relative emissions or relative potential to reduce emissions specific to each of the geographic areas within the non-attainment area. This geographic distribution combined with the interests represented allow the Board to effectively achieve the balance between improved air quality and economic growth.


S. B. 513, enacted during the 1993 state legislative session, provided the legal framework for air quality nonattainment areas in the state of Texas to establish independent Area Emission Reduction Credit Organizations (AERCOs). Under this provision, the Texas Commission on Environmental Quality (TCEQ) granted the Houston-Galveston Area Council's (H-GAC) petition to establish an AERCO on March 23, 1994.

H-GAC created an AERCO to promote the improvement of air quality while helping to mitigate the adverse impacts of control strategies on economic development in the Houston-Galveston region. AERCO will accomplish these goals by administering the Clean School Bus Houston program, accepting Supplemental Environmental Project funds (SEPs) for various projects, and acquiring and distributing emission reduction credits (ERCs). These projects and programs will be used to help meet reasonable further progress State Implementation Plan (SIP) requirements and for economic development purposes.

The federal Clean Air Act mandates that new or expanding industry must "offset", or reduce, permissible emissions by a ratio of 1.3 to 1 in the eight county Houston-Galveston non-attainment area. This means an industry considering expanding or locating in the region which may be legally permitted to emit 100 tons per year of pollutants, would have to locate 130 tons per year of emission reductions prior to approval to build or expand. AERCO could help such industries locate and obtain these necessary emission reduction credits.


AERCO provides a legal framework to promote air quality improvement and economic growth in the eight county Houston-Galveston-Brazoria ozone non-attainment area which includes: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller Counties. The organization provides:

  • The administration of the Clean School Bus Houston program

  • The acceptance of Federal and State Supplemental Environmental Project Funds (SEPs) for clean air projects in the region

  • Mechanism for pooling emission credits and allowances to meet federal Clean Air Act offset requirements and make them available for economic development; and

  • Local option for meeting required emission reductions in the state implementation plan.

Roles and Responsiblities

The responsibilities of AERCO include:

  • Seeking and receiving funds for the Clean School Bus Houston program and for the generation of emission reduction credits; these funds may include Supplemental Environmental Projects and private donations

  • Promoting the generation of emission credits in order to assure emissions offset availability

  • Administration of the Clean School Bus Houston program and distribution of grants to eligible school districts

Within these activities TCEQ provides input,  certifies emission reductions generated through the credit organization, and enforces compliance of any permitted emissions.

Because AERCO’s activities are included within the State Implementation Plan as a voluntary mobile emission program, H-GAC provides staff to help administer AERCO’s responsibilities.