Congressional Inaction Puts the Geothermal Heat Pump Industry and Thousands of Jobs in Peril

Tonight, the U.S. House of Representatives passed a stopgap spending bill to fund the U.S. governmentwithout 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) is extremely disappointed at this outcome after a year of intense effort to extend our tax credits. Now Congress has thrown up yet another roadblock for GHPs.

The exclusion of the Investment Tax Credit from the House stopgap spending bill is the latest roadblock for nascent energy-efficiency technologies.

This time last year, 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, microturbines, small wind and combined heat and power. GHPs are domestically produced, over 90% of the components are made in the USA, and every heat exchanger is installed by Americans.

Expiration of these federal tax credits for commercial and residential applications of GHPs and other clean, renewable energy technologies on Dec. 31, threatens the livelihoods of tens of thousands of Americans employed by these nascent industries.

The technologies left behind are a critical component for meeting energy efficiency and environmental goals in the United States. 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 alone supports a significant share of those workers, offering well-paid manufacturing and installation jobs across a range of specialties encompassing engineering, manufacturing, supply, distribution, sales, drilling, installation and service.

Inaction by Congress has put the once bright future of our industry in peril.

As many of you are aware, GEO and its allies have worked tirelessly and at great expense in Washington and at the grassroots level to persuade congressional leaders on both sides of the aisle to correct their error when only installation tax credits for the wind and solar industries were extended last December.

Despite our best “all hands on deck” effort, we fought an uphill climb against the headwinds of perhaps the most contentious election cycle in American history.

Its outcome has shaken Washington with uncertainties in future tax policy that resulted in tonight’s House action, which was GEO’s last hope this year of extending the tax credits for GHPs before they expire.

Depending on Beltway politics, our next best chance for attaching extension language to viable legislation to gain parity with wind and solar may not happen until late-spring.

But for now, the expiration of renewable energy tax credits impacts both the residential and commercial markets and is a double punch to the gut to businesses and consumers who want to make energy-efficient investments.

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. And homeowners who install this efficient heating and cooling technology will essentially suffer a tax increase.

Advanced energy technologies are good for the economy, consumers, and the environment. Bolstering all technologies – not just wind and solar – should be a no-brainer.

When new pieces of legislation are considered in early 2017, GEO will continue its work to convince Congressional leaders that they must fairly apply the tax code and ensure that the GHP industry can compete on a level playing field with other clean, renewable energy technologies.

We support tax reform that eliminates all forms of subsidies for all energy sources and technologies. If no one is getting a tax break the GHP industry wins because it is the most efficient way to satisfy the thermal loads of buildings, the single biggest user of energy. But until we see that day of a free market for renewable energy technologies, the industry left behind needs immediate parity with wind and solar.

Thousands of U.S. jobs depend on it!

Doug Dougherty
President and CEO
GEO – The Geothermal Exchange Organization

https://www.linkedin.com/company/geothermal-exchange-organization