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US Congress includes modern wood heating incentives in massive clean energy package

In the United States (US), renewable energy, forestry, and rural economic development organizations applaud the passage of the bipartisan Consolidated Appropriations Act of 2021 by lawmakers, which is expected to be signed by the President.

All "neu" pellet boilers on show (left) Fröling "PE1 Pellet", Herz "pelletstar CONDENS" and Hargassner "Nano Pellets".

In the United States (US), renewable energy, forestry, and rural economic development organizations applaud the passage of the bipartisan Consolidated Appropriations Act of 2021 by lawmakers, which is expected to be signed by the President. The sweeping legislation includes a new investment tax credit (ITC) for high-efficiency home heating equipment that utilizes wood pellets, woodchips, and cordwood not unlike those found in Europe, here the all “neu” pellet boilers on show at WSED 2017 in Wels, Austria (left) Fröling “PE1 Pellet”, Herz “pelletstar CONDENS” and Hargassner “Nano Pellets”.

The sweeping legislation includes a new investment tax credit (ITC) for high-efficiency home heating equipment that utilizes wood pellets, woodchips, and cordwood, which was part of a broader tax package extended by Congress to continue the expansion of clean energy technologies, such as wind and solar.

The Biomass Thermal Energy Council (BTEC) and its coalition – BTU Act Coalition – have worked with Congress since 2009 to amend the tax code to incentivize modern wood heating systems through the Biomass Thermal Utilization Act (BTU Act).

The Alliance for Green Heat, Innovative Natural Resource Solutions, Maine Energy Systems, Orion Advocates, Pellet Fuels Institute, Renewable Heating Solutions, Sustainable Northwest, and many more organizations played integral roles to achieve this commonsense tax reform, making renewable wood heating more affordable.

The organizations drew attention to the leadership of Senate and House members from New England.

Senators Susan Collins and Angus King (ME), Jeanne Shaheen and Maggie Hassan (NH), and Representatives Peter Welch (VT), Annie Kuster and Chris Pappas (NH), and Chellie Pingree and Jared Golden (ME) all deserve special recognition for their bipartisan persistence to pass the BTU Act, which was first introduced in 2011. It is also important to recognize Congressman Richie Neal (MA), who as chair of the House Ways & Means Committee recognized the importance of modern wood heating to his state and put his support behind the measure, said Jeff Serfass, Executive Director of BTEC.

Modern wood heating installation tax credit

The credit applies to the installed cost of home heating and hot water systems that utilize wood pellets, woodchips, and cordwood at efficiencies greater than 75 percent high heat value. A federal income tax credit of 26 percent commences with systems purchased in 2021 and phases down to 22 percent in 2022 and 2023.

A wood pellet stove that costs US$4 000 to install in 2021 will realize a savings of US$1 040 once the credit is applied to a homeowner’s 2021 tax return. The BTU Act (S.628, H.R. 1479) also included a business investment tax credit for high efficiency, renewable biomass systems, which was not included in the stimulus package.

We are enormously appreciative of the effort to gain passage of the residential credit. We will work in 2021 to complete our reforms with the new administration and Congress to recognize business and commercial interests with a similar incentive, said Charlie Niebling, of Innovative Natural Resource Solutions, who helped spearhead the effort.

Modern wood heating systems can help homeowners reduce dependence on non-renewable fossil heating fuels like oil and propane. Using wood for heating strengthens local economies, promotes forest health by creating markets for low-grade timber, lowers the risk of wildfires, and reduces greenhouse gas (GHG) emissions.

Setting a 75 percent efficiency threshold is anticipated to spur the deployment of the cleanest and most efficient modern wood and pellet heaters.

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