Bipartisan bills invest in industrial water and energy efficiency

July 20, 2012
WASHINGTON — Sen. Jeff Bingaman, D-NM, has introduced legislation in the U.S. Senate to create federal tax credits of up to 30% for projects that increase water efficiency in manufacturing plants. 

WASHINGTON — Sen. Jeff Bingaman, D-NM, has introduced legislation in the U.S. Senate to create federal tax credits of up to 30% for projects that increase water efficiency in manufacturing plants.

Sens. Olympia Snowe, R-ME, and Dianne Feinstein, D-CA, are co-sponsoring the bi-partisan proposal in the Senate.

Called the Expanding Industrial Energy and Water Efficiency Incentives Act of 2012, the bill would amend the Tax Code to encourage investments in reuse, recycling, and efficiency measures for process, sanitary, and cooling water for industrial and manufacturing facilities. Tax credits would range from 10% for projects that increase efficiency between 25% and 49% up to a 30% tax credit for projects that increase efficiency by 75% or more.

The legislation creates tax incentives in four critical areas — water reuse, advanced motors with adjustable speed drives using process control and connection to Smart Grid, chillers, and highly efficient thermal biomass — and enhances incentives for combined heat and power (CHP) systems.

“A landmark study on energy efficiency found that the industrial sector represents the largest potential for increasing energy efficiency in the country,” Bingaman said. “Such improvements could save American companies $47 billion annually in energy costs. This bill offers focused, short-term incentives to help the industrial and manufacturing sectors make the next generation of efficiency investments necessary for these sectors to remain globally competitive and continue to push innovation.”

Feinstein called the water efficiency tax credits “the sort of policy we desperately need to reduce water waste while supporting our industrial base.”

Specifically, the bill does the following:

  • Establishes $120 per horsepower tax credit for manufacturers that incorporate advanced motor systems — those that offer variable or multiple speed operation and use a set of approved technologies — into new or redesigned appliances, machines or equipment.
  • Establishes an Industrial Process Water Use Project Credit for investments in reuse, recycling and efficiency measures related to process, sanitary, and cooling water for industrial and manufacturing facilities. The U.S. currently re-uses only 6% of its water, and there is significant potential for gains in this area.
  • Establishes an incentive for facilities to retire and replace old chillers that are still using outdated and banned refrigerants. The bill establishes a credit of $150 per ton, plus an additional incentive of $100 for each ton downsized during replacement.
  • Establishes a tiered investment tax credit for highly efficient thermal biomass incentives: 15% for systems that achieve 65% or greater efficiency and 30% for systems that achieve 80% or greater efficiency.

The bill also improves upon an existing tax credit that Congress enacted in 2008 for combined heat and power systems. It expands the credit’s applicability from the first 15 megawatts to the first 25 megawatts of system capacity and removing the overall system size cap of 50 megawatts.

The bill has been endorsed by the Alliance for Water Efficiency, American Council for an Energy-Efficient Economy, the Alliance to Save Energy, the Pew Charitable Trusts, U.S. Combined Heat and Power Association, the Air Conditioning, Heating, & Refrigeration Institute, the National Electrical Manufacturers Association, and the Biomass Thermal Energy Council.

The bill was sent to the Senate Finance Committee, where Bingaman chairs the Subcommittee on Energy, Natural Resources and Infrastructure.  No hearings have so far been scheduled.

Water-energy nexus

Meanwhile, over in the House of Representatives, Rep. Eddie Bernice Johnson, D-Texas, introduced legislation to require $300 million in new federal research into the energy-water nexus and to create a new White House initiative on water policy.

“Water availability and quality are essential for public health and a strong economy,” Rep. Johnson said in introducing her legislation on the House floor. “But demands for and threats to these resources are growing.”

“Whether it is billions of dollars in lost revenue for our agricultural sector or reduced electric reliability due to low cooling water supplies for power plans, the country is already feeling the impacts of reduced water availability and quality,” she added.

Her proposals are contained in two bills, both of which were immediately referred to the House Committee on Science, Space and Technology.

One measure, The Energy and Water Research Integration Act of 2012 (H.R. 5827) focuses attention on the energy-water nexus — the energy required to provide reliable water supplies and the water required to provide reliable energy supplies.  The legislation would direct the Secretary of Energy to include water considerations in the Energy Department’s energy research and to minimize freshwater withdrawal and consumption, increase water use efficiency, and utilize nontraditional water sources.

The legislation would authorize $300 million over five years for this research and an additional $10 million to fund a new Energy-Water Architecture Council to help coordinate and promote better energy and water data collection.

The second bill, The Coordinating Water Research for a Clean Water Future Act of 2012 (H.R. 5826) would elevate the importance of water research by creating a National Water Research and Development Initiative at the White House Office of Science and Technology Policy. The goal is to increase the federal government’s role in coordinating federal water research activities to identify and address changes in water use, quality, supply, and demand.

“We applaud Rep. Johnson’s efforts to address crucial issues of water use, particularly regarding the important energy-water nexus,” said Mary Ann Dickinson, president and CEO of the Alliance for Water Efficiency.  “The relationship and interdependence of water and energy are all too often forgotten in research and policy decisions.”

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