As I See It

Renew tax incentives for green work in 2011

I fear that with the political turmoil we are now facing that tax incentives encouraging investment in energy and water-saving technologies will expire on December 31.

The tax credits for new high efficiency boilers, furnaces, water heaters, heat pumps, central air conditioners, building shell improvements and some biomass stoves end on New Years Eve.

The tax incentives for water heaters, heating equipment, central air and biomass cover 30% of the cost up to a maximum of $1,500. The appliances must be Energy Star rated, where applicable. Biomass equipment must be 75% efficient. Most of the heating equipment must be condensing, heat pumps and central air must be high SEER. Gas, oil or propane water heaters with an energy factor of 0.82 and electric water heaters with an EF 2.0 also qualify.

The cost of installation can be included for all of those products.

Fortunately, there are tax credits that don’t expire until Dec. 31, 2016, so they should survive our current climate in Washington. The energy tax credit for geothermal heat pumps, solar, small wind turbines, and fuel cells covers 30% of the cost with no upper limit (except for fuel cells). All of the covered equipment has efficiency requirements.

Residential wind turbines can have a nameplate capacity of no more than 100 kW.

Solar includes both photovoltaics and solar water heaters, but at least half of the energy generated for the house must come from the sun. The system must be certified either by Solar Rating & Certification Corp. (SRCC) or by some other certifying agency that’s approved by the state government.

At the recent WaterSmart Innovations Conference, Mary Ann Dickinson, executive director of the Alliance for Water Efficiency, said she was encouraged to see some movement at the state and federal level, since not much had been passed since the Energy Policy Act amendments in 1992. There are 30 bills in various stages that include water efficiency measures. The stimulus included $6 billion for water, although some of money was for traditional infrastructure, such as storm water retention. A number of states actually prohibited water conservation work unless it was tied to a capital project, such as a new sewage treatment plant.

Dickinson described progress in water efficiency as baby steps. In addition to money in the stimulus bills, a new Executive Order mandates a 26% reduction in water use in federal buildings by 2020, she said. Each agency will get a senior sustainability officer to make sure that conservation measures actually get done.

Dickinson also noted that EPA’s WaterSense program must be authorized and funded beyond the paltry $2.5 million that it’s “borrowing” from other EPA budgets. She also listed several climate and green infrastructure bills, none of which, she noted, have a prayer of passing.

I don’t share Dickinson’s enthusiasm for the Home Star bill, S.363, which includes $5 billion for energy work and $100 million for water conservation. Tom Meyer, P.E., a Washington lobbyist affiliated with the Green Mechanical Council, has written in the pages of CONTRACTOR about what an unmitigated boondoggle Home Star will be for plumbing and mechanical contractors (http://bit.ly/bF7M4r).

The Germans have been successful in using tax incentives to direct purchases of high efficiency equipment, which is why condensing boilers, solar and wood pellet boilers are popular over there. Of course, the Germans have an incentive — historically high energy prices and the Russians. Every couple of years the Russians get into a billing dispute with the Ukrainians and cut off much of the natural gas supply to Western Europe. One way to handle that is to use as little energy as possible.

That’s why I believe that tax incentives for the purchase and installation of water- and energy-saving products should be continued. I am not, however, optimistic about their future.

TAGS: Geothermal