Congress Discontinues Geothermal Heat Pump Tax Credit
New Spending Bill Does Not Include Extension of GHP Tax Credit
The U.S. House of Representatives introduced a stopgap spending bill on Dec. 6 to fund the U.S. government without including an extension of the Investment Tax Credit (Sec. 48) or Residential Energy Efficiency Property Credit (Sec. 25D) for geothermal heat pumps (GHPs).
The Geothermal Exchange Organization (GEO) says it is extremely disappointed with the outcome after a year of intense effort to extend the tax credits, which positively impact geothermal drillers. GEO describes the bill as yet another roadblock for GHPs.
Around the same time in 2015, Congress extended energy tax credits for wind and solar technologies that are primarily produced overseas, but left out lower profile options like GHPs, fuel cells, micro-turbines, small wind and combined heat and power. GHPs are domestically produced, more than 90 percent of the components are made in the U.S., and every heat exchanger is installed by Americans, GEO says.
The organization sees the technologies left behind as a critical component for meeting energy efficiency and environmental goals in the U.S. The exclusion of energy tax credits from the House spending bill not only threatens progress on that front, but the economy as well.
The GHP industry supports a significant share of workers, offering manufacturing and installation jobs across a range of specialties encompassing engineering, manufacturing, supply, distribution, sales, drilling, installation and service.
The next best chance for attaching extension language to legislation to gain parity with wind and solar may not happen until late-spring of 2017, GEO says.
In addition to losing the Investment Tax Credit, businesses will no longer be able to use a tax provision for five-year accelerated depreciation and first-year bonus depreciation for installing GHP technologies. Homeowners who install the heating and cooling technology will essentially face a tax increase.
When new pieces of legislation are considered in early 2017, GEO plans to continue its work to convince Congressional leaders that they must apply the tax code and ensure that the GHP industry can compete on a level playing field with other clean, renewable energy technologies.
GEO is a non-profit trade association representing the interests of the geothermal/ground-source heat pump industry across the U.S. GEO advocates the technology to government, industry and the public, educating leaders about the economic, national security and environmental benefits of geothermal heat pumps for residential, institutional and commercial applications. To learn more, go to www.geoexchange.org.