Green Heat News

Two pending bills in the House and Senate aim to extend and enlarge the tax credit for residential biomass heating systems. On the Senate side, Senator Snowe (R-ME) introduced S. 1643, the "Cleaner, Secure, and Affordable Energy Act" co-sponsored by Senators Bingaman (D-ME) and Gregg (R-NH). This bill is innovative as it gives incentives to consumers to switch from oil heat to biomass or gas. Consumers would get a 30% tax credit up to $4,000, instead of just the $1,500 allowed by the current federal tax credit. The new credit would also extend through the end of 2011, a year longer than allowed in current legislation.
Senator Olympia Snowe

On the House side, Rep. Paul Hodes (D-NH) introduced H.R. 2080, the "American Renewable Biomass Heating Act" a bill that enlarges the existing biomass tax credit to $6,000 and extends it through 2013. The bill is co-sponsored by 8 other representatives: Arcuri (D-NY), Hall (D-NY), Michaud (D-ME), Polis (D-CO), Ross (D-AR), Shea-Porter (D-NH) Tonko (D-NY) and Welch (D-VT).

Senator Snowe's bill addresses particulates and greenhouse gases from oil furnaces - the credit to applies only to consumers who are replacing an oil furnace. This stipulation means that the bill could potentially have a large impact in the Northeast, where oil furnaces are still common.
The Hodes bill gives the credit to anyone who purchases a biomass stove or boiler, and isn't limited to households that currently use oil.

Both of these bills would help achieve more parity between residential biomass and residential solar, wind and geothermal resources. Residential biomass is addressed in the energy efficiency section of the tax code rather than in the renewable energy section, which essentially caps tax credits for biomass at $1,500. The tax credit for other renewables has no cap, making them more attractive options financially. This has held back the biomass sector considerably at a time when Europe is aggressively promoting very clean and efficient residential biomass systems to help curb global warming.

The current tax credit of 30% (up to $1,500) for stove purchase and installation gives an effective 30% discount for a wood burning system if the homeowner spends about $5,000. The purchase and installation costs of most wood and pellet stoves is within this range (between $3,000
Rep. Paul Hodes
and $6,000), but the purchase and installation of wood and pellet boilers
and furnaces is often $8,000 to $15,000. The capped tax credit does not
provide enough of an incentive for people to install these whole-house
systems, despite their efficiency.

Both the Snowe and Hodes bills would help incentivize these whole-house boilers and furnaces, which are much more effective at stabilizing heating costs and lowering reliance on fossil fuels because they can be used to entirely replace a conventional heating system.

The proposed bills will continue to apply the existing standard requiring biomass systems to be 75% efficient. This standard is not difficult for biomass systems to meet and, unlike electricity-based Energy Star standards, it encompasses most modern biomass systems. The Snowe bill takes the extra step of raising the efficiency requirements for eligible gas boilers from 85% to 90% and gas furnaces from 92% to 95%, thus incentivizing only the very cleanest gas appliances on the market.

The Snowe/Bingaman and Hodes bills will give badly needed impetus to an important renewable energy source that has been largely overlooked for its thermal properties. Without bills such as these, the US will fall further behind Europe in using thermal biomass to reduce greenhouse gases, and reliance on both domestic and imported fossil heating fuels will persist.