HVAC Residential Market / Geothermal Heat Pumps / Standards & Legislation

Geothermal Lobbies to Join Renewable Ranks

Geothermal Industry Reps Continue to Fight for Renewable Label, Seek Extended Tax Credits

March 24, 2014

While the green qualities and benefits of geothermal systems may be a no-brainer to those in the industry, the technology’s efficient and renewable advantages have yet to gain universal recognition. As a result, the Geothermal Exchange Organization (GEO) is continuing to concentrate its lobbying efforts on including geothermal in federal and state definitions of renewable energy.

In addition, GEO is also focused on extending the federal tax credits for geothermal heat pump installations, which are set to expire at the end of 2016. Although there was some concern that the credits might be terminated early as part of a tax reform overhaul, GEO is optimistic about getting the tax credits extended through 2020.

The Definition of Renewable

Having federal and state authorities recognize geothermal energy as a renewable energy is an ongoing advocacy effort at GEO.

“Recognition of the renewable and clean energy potential of our technology is growing, and we will continue to work with a growing number of state geothermal heat pump associations to ensure that outcome in Renewable Energy Portfolio Standards across the country,” said Tom Huntington, chairman of the board of GEO and president and CEO of WaterFurnace Intl. Inc.

According to Doug Dougherty, president and CEO of GEO, it is an immense challenge for the geothermal industry to change every state’s renewable energy definitions, since GEO was not at the table when the standards were originally developed.

“We didn’t have any advocacy efforts,” he said. “We were left out because everyone thinks that renewable energy must be generated.”

Dougherty pointed out that Maryland and New Hampshire were the first two states to change their definitions of renewable energy to include “thermal load avoided,” which allows geothermal to be classified as renewable.

“We have efforts now underway in Massachusetts, Wisconsin, Missouri, California, and New York,” added Dougherty.

At the federal level, Dougherty noted that the Shaheen-Portman energy bill, which was first introduced as S. 1000 in 2011 and has since been reintroduced on the Senate floor, includes a “bipartisan-agreed-to amendment that will allow geothermal technology to be considered renewable by the federal government’s definition of clean energy.”

He added, “We’ve been working very hard on this. It’s been a three-year effort, and no bill has been passed so far.”

Overall, Dougherty said, “We remain undaunted with the state-by-state effort, and we continue to push federally because that will make it easier at every stage.”

Extending Tax Credits

The federal tax credits for geothermal projects, which offer a 10 percent credit of the total maximum for the installation of geothermal heat pumps on commercial projects and 30 percent on residential projects, were established by the American Recovery and Reinvestment Act (ARRA) in 2009. As the law was written, the credits are set to expire on Dec. 31, 2016. However, the geothermal industry is closely tracking tax initiatives in Washington, D.C., and working to get these credits extended.

“We don’t take our eye off that ball,” Dougherty said, noting that GEO has already filed formal comments with both the House and Senate to request extension of the tax credits until 2020.

According to Huntington, there has been a lot of buzz in Washington, D.C., about tax reform, which has led to “some worry across the industry that Congress may end them [the geothermal tax credits] earlier as a cost-cutting measure.”

Although a tax-reform draft bill released in February would have terminated the residential geothermal credit at the end of 2014, Dougherty said the bill was “dead on arrival in the halls of Congress, and that the industry’s tax credits are safe for the time being.”

Praising the progress that GEO has made in its lobbying efforts, Huntington reiterated that the association’s formal comments asking for an extension through 2020 were well received.

“To our delight, committee staffers responded with, ‘What would you like to see after 2020?’” he said.

Dougherty added that he hears the credits are important to the industry every day, and he is currently very optimistic about getting them extended.

“Our argument to the policy maker is pretty simple,” he said. “We’re still a nascent industry that has tremendous positive energy policy benefits for the country, and we have yet to get to where we have economies of scale. And one of our biggest barriers, as everybody knows, is upfront cost. So to take the tax credit away would just decimate our industry because, until we get to where we’re 20-30 percent of new home construction and new commercial building construction, we’re not going to have the economies of scale to lower our cost.”

Publication date: 3/24/2014 

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