WASHINGTON, DC – Yesterday, United States Senators James Inhofe (R-OK) and Ken Salazar (D-CO) introduced the bipartisan Geothermal Heat Pump Development Act of 2007, which would provide American homes and businesses with tax credits to promote greater use of geothermal heat pumps (GHPs). Geothermal heat pumps are electrically-powered devices that use the earth’s natural heat storage ability to heat and cool homes and meet energy demands.
According to the Environmental Protection Agency, GHPs are the most energy-efficient and environmentally clean space-conditioning systems currently in use. However, in the absence of federal tax credits to help mitigate the comparatively high installation costs associated with geothermal heat pump systems, American homes and businesses often find themselves unwilling or unable to tap into this proven technology. The Salazar-Inhofe bill would help overcome these cost barriers by amending current tax code to make geothermal heat pump systems eligible for the energy tax credit and the residential energy efficient property tax credit, for businesses and consumers, respectively.
“Geothermal heat pumps are a proven, effective, and efficient technology that can meet consumer heating and cooling needs while simultaneously conserving energy,” Senator Inhofe said. “Our legislation encourages the use of this renewable and cost-effective energy source by providing tax credits for businesses and residents who install geothermal heat pumps. Similarly, I introduced legislation in June to encourage the use of this renewable source in federal buildings. My home state of Oklahoma has long been an energy leader for our country and I am proud of Oklahoma companies like ClimateMaster, Inc. that have developed geothermal heat pump technology that will substantially reduce energy demands for private businesses, residents, and federal buildings.”
“Earlier this year, I cosponsored the National Geothermal Initiative Act because I believe the more we diversify our Nation’s energy portfolio, the closer we will get to true energy independence,” said Senator Salazar. “By making it easier for American homes and business to tap into the potential of highly efficient geothermal technologies such as GHPs, we will help develop a more secure and sustainable domestic energy program founded on clean, renewable and reliable energy alternatives.”
Specifically, the Geothermal Heat Pump Development Act of 2007 would:
Ø Amend the Internal Revenue Service Code of 1986 so that:
o Businesses could claim an Energy credit in the amount of 10 percent of the installed cost of a new geothermal heat pump system.
o Consumers could claim a residential energy efficiency property credit in the amount of 30 percent of the installed cost of a new geothermal heat pump system up to a maximum credit of $2,000.
Ø Provide AMT relief by permitting the exemption of the geothermal heat pump energy efficient property credit from the AMT.
Ø Allow accelerated depreciation (3 years) of the installed geothermal heat pump equipment.
A panel convened by MIT concluded in a recent report that, “Geothermal heat pumps provide an important example of how low-grade thermal energy…leads to substantial energy savings in the heating and cooling of buildings.”
For more information on Geothermal Heat Pumps, please click here.