Collins, King Urge Senate Finance Committee to Include BTU Act in Tax Extender Legislation

WASHINGTON, D.C. – U.S. Senators Susan Collins and Angus King wrote to the leaders of the Senate Finance Committee, urging them to include language from the Biomass Thermal Utilization (BTU) Act in any tax extender legislation. The BTU Act is bipartisan, bicameral legislation that would help promote the many economic and environmental benefits that biomass thermal energy provides by qualifying biomass heating equipment for renewable energy tax credits.

“Many regions of the United States are rich in sustainably managed biomass resources. For example, in 2016, biomass produced 27 percent of Maine's electricity and employed over 1000 of our citizens,” Senators Collins and King wrote. “Yet Maine and other states continue to rely heavily on imported fossil fuels (heating oil, natural gas, propane) for residential and commercial heating during the long, cold winters. High-efficiency biomass heating systems can sustainably help to meet residential and commercial heating needs, catalyze economic development especially in rural forest- and farm-dependent communities, and create jobs and opportunity through local, renewable heating sources. That is why this bill is co-sponsored by members from the Northwest, Northeast, and Midwest.”

More specifically, the BTU Act would add biomass fuel property to the list of existing technologies that qualify for the residential renewable energy investment tax credit. To qualify, the biomass fuel property must operate at a thermal efficiency rate of at least 75 percent and be used to either heat space within the dwelling or heat water. The bill would also add open-loop biomass heating property to the list of existing technologies that qualify for the commercial renewable energy investment tax credit in the federal tax code. Qualifying biomass heating property must operate at thermal output efficiencies of at least 65 percent and be used to generate heat, hot water, steam, or industrial process heat. The credit would be two-tiered: for technologies that operate at thermal output efficiencies between 65 and 80 percent, the investment tax credit is limited to 15 percent of installed capital cost. Technologies operating at thermal output efficiencies greater than 80 percent would be eligible for the full 30 percent investment tax credit.

By offering tax incentives, the legislation would encourage people and businesses to upgrade away from oil boilers to highly efficient biomass heating systems.

The letter is below and can be read in full HERE.

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Dear Chairman Hatch and Ranking Member Wyden:

As the Finance Committee begins to consider tax extender legislation, we write to urge the inclusion of high efficiency biomass heating equipment under the renewable energy investment tax credits provisions of section 25D and section 48 of the Internal Revenue Code. 

Legislation we have sponsored, the Biomass Thermal Utilization (BTU) Act of 2017 (S. 1480), seeks to achieve parity in the tax code between thermal biomass and other renewable systems.  While a number of clean and efficient technologies qualify for investment tax credits for capital costs incurred in residential and commercial installations, including biomass electric generation, solar thermal, and geothermal, biomass thermal does not qualify and we believe this to be a serious oversight.  The BTU Act would recognize and promote the many economic and environmental benefits that biomass thermal energy provides by correcting the omission of high efficiency biomass heating equipment from the investment credit provisions in the Internal Revenue Code.    

Many regions of the United States are rich in sustainably managed biomass resources.  For example, in 2016, biomass produced 27 percent of Maine’s electricity and employed over one-thousand of our citizens.  Yet Maine and other states continue to rely heavily on imported fossil fuels (heating oil, natural gas, propane) for residential and commercial heating during the long, cold winters.  High efficiency biomass heating systems can sustainably help to meet residential and commercial heating needs, catalyze economic development especially in rural forest and farm dependent communities, and create jobs and opportunity through local, renewable heating.  That is why this bill is co-sponsored by members from the Northwest, Northeast, and Midwest.   

A significant barrier preventing homeowners and businesses from converting to biomass thermal systems is the relatively high up front capital costs of conversion.  By granting access to a modest investment credit, Congress can break down that barrier and accelerate the deployment of advanced wood heating technologies in our heavily oil dependent region. 

We look forward to working with you and other members of the Finance Committee as clean energy tax extender legislation advances.  Thank you for your consideration.

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