WASHINGTON, DC — “Congress missed an important and timely opportunity this week to achieve parity among renewable energy tax incentives and to advance an important technology,” said Geothermal Exchange Organization (GEO) President and CEO Doug Dougherty.
The Senate will soon pass the Federal Aviation Administration (FAA) reauthorization bill with no amendments—including one that GEO had hoped would extend federal tax credits for geothermal heat pumps (GHPs) for an additional five years, giving them parity with solar energy installations through the year 2021.
“GEO is disappointed that Congress did not address the inequity created last December when they granted 5-year extensions for commercial and residential solar energy installations through 2021 in the omnibus spending bill, but left out GHPs and other important technologies like fuel cells, small wind and combined heat and power,” he said.
GHPs are a highly efficient heating and cooling technology that uses the ground near a building to tap and store heat. Households and businesses have relied on federal tax credits since 2008 to help use the technology and to overcome higher installation costs compared to conventional equipment.
Without intervention by Congress to address its error last December, residential and commercial tax credits for GHPs are set to expire at the end of 2016.
To fix the inequity created in the omnibus bill late last year, GEO pushed hard for an amendment to the FAA bill that would have extended the tax credits for GHPs and other qualifying renewables through 2021 (with a phase-out). Those efforts collapsed this week after legislators overloaded the FAA legislation with non-energy related tax matters. On Tuesday (4/14), Senate leadership dropped all amendments in favor of “clean” legislation for passage next week.
“It appears that despite our best efforts, we have lost this round of opportunity,” said Dougherty. “Though we will keep our ears to the ground, there are currently no signs that any new tax amendments will be considered for the FAA bill.”
The missed opportunity to give GHPs parity with solar energy systems is already having a detrimental impact on the ability to install commercial GHP systems. “Because the GHP industry does not enjoy the added benefit granted to solar by changing the time frame of tax credit availability from ‘placed in service’ to ‘project commenced," many commercial projects being designed today will not use GHP systems.
"The debate was characterized by Congress as a tax and revenue issue when in reality it was a policy issue" said Dougherty. "The policy issue was elimination of unequal treatment in the renewable energy marketplace, and reestablishment of a uniform application of the tax code for all renewable industries. Unfortunately, the inequity for GHPs remains, and no short-term fix appears likely."
Even so, Dougherty said, “The battle is not yet lost. Our tax credits are still in force until the end of 2016. “Congressional leadership remains committed to fixing the problems they created last year, and GEO will make every effort to make equal treatment for our technology a priority during the coming months.”