Recently, parts of The BTU Act (Biomass Thermal Utilization Act) were passed through Congress and signed into law, officially placing wood pellet stoves on a level playing field with other renewables that have been receiving appliance tax credits for a long time.
What does this mean for residential wood pellet heating?
A three-year investment tax credit (ITC) for high-efficiency wood-fired home heating equipment is now official!
The credit applies to the installed cost of home heating and hot water systems that utilize wood pellets, chips and cordwood at efficiencies greater than 75 percent high heat value.
The tax credit is for 26 percent in 2021 and phases down to 22 percent in 2022 and 2023.
For example, a wood pellet stove that costs $4,000 to install in 2021 will result in a savings of approximately $1,000 when applied to the homeowner’s 2021 tax return.
Charlie Niebling, a consultant for wood pellet producer Lignetics, has been working to enact the BTU Act for more than a decade. He has called the tax credit plan a “game changer” for residential wood heating.
“Our message to Congress for years has been…don’t pick winners and losers,” explained Niebling. “[Wood heat] deserves the same recognition in the federal tax code that solar and wind do.”
If you’d like details about this bill passing, read more here.
The first National Clean Energy Week, a forum striving to encourage support of the United States’ energy sector through technological innovation and policy change, is taking place the week of September 25-29. According to the organization’s website:
Across America, clean and readily abundant forms of energy are powering more than homes and businesses. Taken together, our capacity for safe and reliable energy generation is driving a clean energy renaissance that is creating jobs, strengthening America’s national security, and preserving our environment.
Wind and solar energy have long been the power-houses of renewables. While the carbon neutrality of biomass (organic materials used for energy) has been debated, studies show significant carbon benefits can be achieved through the use of organic residue based biomass in power generation facilities. Additionally, the collection of forest waste for use is essential to responsible forest management. Unlike living trees that draw carbon from the atmosphere – dead tree leftovers release carbon into the atmosphere.
This past spring, the House Appropriations Committee voted to officially designate biomass as carbon neutral. The FY2017 Omnibus Appropriations bill directed U.S. government energy leaders to recognize the benefits of using forest biomass for energy creation and forest management.
The biomass power industry removes over 68.8 million tons of forest debris annually, improving forest health and dramatically reducing the risk of forest fires. In addition, the biomass industry diverts millions of tons of waste material from landfills and open burns. Biomass power plants also eliminate the need for frequent open burns of agricultural waste and forest slash, while continuing to offset the use fossil fuels that produce smog and acid rain.
Biomass power will be highlighted alongside energy sources including solar, geothermal, wind and hydropower during the National Clean Energy Week forum in Washington D.C. Click here if you’d like to learn more and get involved!
Source: Biomass Magazine
A recent study commissioned by the Biomass Power Association (an organization representing 80 biomass power plants across the U.S.) compared the carbon intensity of a forest residue biomass power facility in New Hampshire to that of a combined cycle natural gas facility.
Dr. Madhu Khanna (of the University of Illinois Department of Agricultural/Consumer Economics) and Dr. Puneet Dwivedi (of the Warnell School of Forestry and Natural Resources) found significant carbon benefits can be achieved through the use of organic residue based biomass instead of natural gas in power generation facilities.
The results showed immediate carbon savings of 115%, and 98% carbon savings over 100 years.
This “forest residue” is the leftover matter from harvesting wood fiber in a managed forest for paper mills and lumber mills. The leftovers include tops, limbs and other forestry byproducts are generated regardless of being used for power or just left to decay. If it’s not collected and used as biomass power, it will typically remain in the forest in slash piles – which are isolated piles burned safely in order to keep forests healthy. This kind of forest management is important, because unlike living trees that draw carbon from the atmosphere – dead tree leftovers release carbon into the atmosphere.
“The avoidance of carbon and methane emissions by removing from the forest and using materials that decay results in a significant GHG reduction over time. While the decay of these materials releases small amounts of methane consistently over time, the methane gas has a 21 times higher global warming impact on the climate than carbon dioxide. Even a small amount of avoided methane release can substantially increase the near term benefits of removing harvesting residues and using them for electricity generation instead of leaving them in the forest and continuing to burn natural gas for electricity.”
-Case Study: Carbon Intensity of Harvesting Residue-Based Electricity
The decay rate of forest biomass, the carbon/methane emissions that would have occurred if the organic leftovers stayed on the forest floor, and the incidental carbon emissions incurred during the harvesting/chipping/transportation process were all factors taken into account during the study.
Interested in learning more? Check out the full study, here.
The White House has just released the United States Mid-Century Strategy for Deep Decarbonization, a national U.S. strategy to decarbonize the economy over the next 34 years.
This report spans over 100 pages, and details the 2050 vision of economy-wide net greenhouse gas emissions reductions of 80 percent or more below 2005 levels. The White House explains:
“The MCS demonstrates how the United States can meet the growing demands on its energy system and lands while achieving a low-emissions pathway, maintaining a thriving economy, and ensuring a just transition for Americans whose livelihoods are connected to fossil fuel production and use,”
Did you purchase a biomass-burning heating system for your home that meets the 75% efficiency rating between January 1, 2015 and now? If you did, you’re likely eligible for the $300 Biomass Federal Tax Credit!
Unfortunately, there’s no master list of eligible stoves. To make sure yours meets the 75% efficiency rating requirement, just check with your retailer.
You’re able to claim this credit as long as the stove was installed in your principal residence. This is the home you live in most of the time. It must be in the United States, and it can include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home. New construction and rentals do not apply.
You’ll need the Individual Income Tax Return Form 1040 and the Residential Energy Credits Form 5695 to include the Biomass Federal Tax Credit on your filing. If you bought your eligible stove this year, or are planning to this year, prepare for your 2016 tax filing by keeping your sales receipt and the manufacturer’s certification. These are just for your records, not to be attached.
If your stove meets all the requirements, and you purchased it in 2015, did you include it on your tax return? If you missed out on the Biomass Federal Tax Credit, use form Form 1040X – Amended U.S. Individual Income Tax Return. You have up to three years after the filing or due date, or two years after paying your taxes to amend. Full information on how to amend your return can be found here.
For More Information, See HPBA’s Tax Credit Guide, Here
Residential Wood-Pellet Rebate Program in New Hampshire
Rebates offered for 30% of the system and installation cost, or $6,000, whichever is less, for New Hampshire residents who invest in high-efficiency (80% or greater), bulk-fuel fed, wood-pellet central heating boilers and furnaces that became operational on or after May 1, 2012.
This program has helpful recommendations, which include the use of
high quality wood pellets; “The life expectancy of the system will be significantly reduced and the operation and maintenance will be considerably greater if lower quality fuel is used.”
The Incentive Pre-Approval Application for NH can be found here, along with the full program details.
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