King, Collins introduce bill to support biomass energy

U.S. Senators Angus King (I-Maine) and Susan Collins (R-Maine) along with U.S. Representatives Peter Welch (D-Vt.) and Mike Kelly (R-Pa.) today introduced the Biomass Thermal Utilization Act of 2017, legislation that incentivizes the development of biomass as an affordable, clean, and home-grown source of energy. Senators Jeanne Shaheen (D-N.H.), Maggie Hassan (D-N.H.), and Jeff Merkley (D-Oreg.) are also original sponsors of the bill.

“Biomass offers an efficient, inexpensive, and environmentally-friendly way for people to heat their homes and businesses, which is why it would only make sense to incentivize purchasing it like we do other low-cost types of energy,” Senator King said in the news release. “With this change, we could reduce our dependence on fossil fuels, lower energy costs, and support local economies – a true hat-trick for Maine.”

“Biomass is a sustainable and cost-effective source of power for homes and businesses and an essential part of our nation’s energy future,” said Senator Collins. “Our legislation will help more Americans upgrade to efficient, renewable biomass energy heating systems as well as support jobs tied to the forest products industry.”

“Biomass heating systems are a great way to reduce heating bills while improving the environment,” said Congressman Welch. “Using a regionally sourced fuel like wood will reduce our reliance on fossil fuels and spur Vermont’s local wood fuel industry. This bipartisan legislation will make it more affordable for Vermonters to install a modern wood heating system so they can lower their energy costs and increase our energy independence.”

“With biomass fuels an affordable and abundant natural resource in Pennsylvania, this bill would encourage the further development of advanced biomass technologies similar to other renewable energy technologies already included in the tax code. Pennsylvania’s hardwood forests are some of the finest in the world and our hardwood producers are important job creators in so many of our rural communities,” said Congressman Kelly. “The BTU Act would help harness the region’s enormous biomass production potential and be a win-win-win for America’s energy independence, security, and rural economies, where wood chips, wood pellets, and native grasses are locally produced.”

More specifically, the bill would amend the federal tax code to incentivize biomass energy through tax credits for capital costs incurred in residential and commercial installations. Tax incentives already exist for other forms of renewable energy and this bill seeks to achieve parity between those renewable systems and thermal biomass systems.

Specifically, the BTU Act would:

  • Underscore that heat from biomass is an underutilized energy source in the United States
  • 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
  • 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 efficient wood-pellet boilers.

“We’re extremely grateful to Senator King and other leaders in the Senate who have brought the BTU Act forward this year. It is time high efficiency, advanced wood heating technology was accorded the same investment tax treatment that exists for every other renewable energy technology,” said Jeff Serfass, Executive Director, Biomass Thermal Energy Council. “We hope that the current attention on comprehensive tax reform will open up an opportunity for serious consideration of this modest, but regionally very important renewable energy incentive. Ultimately homeowners and businesses with high heating costs will be the beneficiaries, coupled with creation of new markets for sustainably harvested wood resources.”

“Automated wood heating systems are an economical and environmental win for rural forested states like Maine, New Hampshire, Vermont, and northern New York,” said Rob Riley, President, Northern Forest Center. “Switching from fossil heating fuels keeps heating dollars local, lowers carbon emissions, and provides markets for sustainably harvested wood from the region’s forests. The BTU Act will help accelerate adoption of this technology, and we are grateful to Senator King and his colleagues for introducing this important legislation.”

“Promoting highly efficient uses of biomass helps the nation address climate change while supporting local jobs for those in the forest products industry,” said Collin O’Mara, CEO of the National Wildlife Federation. “When precautions are used to protect wildlife and ensure climate benefits, thermal biomass can be a truly sustainable domestic energy source.”

According to industry advocates, thermal biomass systems reduce heating bills can reduce heating costs by 20 to 50 percent. Wood pellets, a common biomass fuel, cost roughly the equivalent of $2.00 per gallon of heating fuel. Additionally, nearly every cent of biomass heating investments is returned to the local economy whereas 80 percent of every heating oil dollar is sent out of the state. In New York State and New England, it has been estimated that for every 100,000 tons of pellets manufactured, 342 direct jobs are manufactured.

Senator King has introduced similar legislation in the past.