U.S. Senators Jeff Bingaman (D-New Mexico), Olympia Snowe (R-Maine) and Dianne Feinstein (D-California) have introduced bipartisan legislation to incentivize American industry to operate more cleanly and efficiently – and thus, more competitively.
The Expanding Industrial Energy and Water Efficiency Incentives Act of 2012 creates tax credits that reward business retrofits in four key areas: water reuse, smart motor technologies, next-generation chillers and thermal biomass. The measure also offers greater inducements to deploy combined heat and power (CHP) systems.
"Such improvements could save American companies $47 billion annually in energy costs,” said Senator Bingaman. “This bill offers focused, short-term incentives to help the industrial and manufacturing sectors [adopt] the next generation of efficiency investments.”
Key sections of the bill:
Combined Heat and Power Credit – A recent Department of Energy study estimates that increasing U.S. combined heat and power (CHP) to represent 20 percent of electricity capacity would eliminate more than 60 percent of the expected increase in carbon dioxide emissions from today through 2030 – the equivalent of taking more than half of current passenger vehicles off America’s roads.
In 2008, Congress enacted a 10 percent investment tax credit for CHP systems. This bill would expand that credit’s coverage, from the first 15 megawatts to the first 25 megawatts of system capacity. The bill also would eliminate the existing overall system-size cap of 50 megawatts, making a greater number of CHP projects financially feasible.
Industrial Motor Efficiency Credit – On average, motors account for 65 percent of an industrial energy user’s electricity use. New advances over the past five years have advanced the potential for new smart motor technologies to provide significant energy savings, if they are placed widely into service. The bill establishes a $75-per-horsepower tax credit for efficient motor systems with adjustable speed capability.
CFC Chiller Replacement Credit – Large water-cooled chillers are the engines of air-conditioning systems in nearly all large buildings. The bill would establish a credit of $150 per ton—plus an additional incentive of $100 for each ton downsized during replacement. The incentive would extend only to pre-1993, post-1980 water-cooled chillers that use the environmentally harmful (and banned) refrigerants CFC-11 and CFC-12.
Industrial Water Reuse Credit – The United States currently reuses only 6 percent of its water. In recognition that the industrial sector is responsible for 45 percent of domestic freshwater withdrawals – and is therefore the perfect place to introduce transformative water reuse and water-saving technologies – the measure would create a technology neutral, performance-based investment tax credit for reuse, recycling and/or efficiency measures in manufacturing. Savings would be certified by a third-party engineer.
Thermal Biomass Credit – To date, there have been no incentives to promote thermal-only biomass use for commercial and industrial applications. Using biomass for thermal applications has numerous advantages over using biomass to produce electricity. Thermal use is significantly more efficient, less polluting, and more appropriately scaled to biomass resources (which are limited to certain “haul distances”). This bill creates a tiered investment tax credit: 15 percent for systems that achieve 65 percent or greater efficiency; and 30 percent for systems that achieve 80 percent or greater efficiency.
"Maine's manufacturing sector has consistently raised the high cost of energy as a major competitive disadvantage,” Senator Snowe said. “While I continue to work to expand natural gas utilization for manufacturers, the easiest method is through investments in energy efficiency. This legislation will catalyze investments in technologies that use finite and expensive energy more efficiently, reducing operating costs and increasing our global competitiveness.”
"This bill will help California businesses be more energy efficient and increase their productivity. The bill uses efficiency measures to reduce energy consumption of industrial motors by up to 2.3 billion kilowatt hours (kWh) annually, just in California, saving our industrial sector more than $200 million each year,” remarked Senator Feinstein. “The bill also includes a unique tax credit to reduce water consumption in the desert Southwest, the sort of policy we desperately need to reduce water waste while supporting our industrial base."
The bill has been endorsed by the American Council for an Energy-Efficient Economy, the Alliance to Save Energy, Pew (News - Alert) Charitable Trusts, U.S. Combined Heat and Power Association, the Air Conditioning, Heating, and Refrigeration Institute, the National Electrical Manufacturers Association, and the Biomass Thermal Energy Council.
"Each of the provision in the bill represents important opportunities to promote energy efficiency in the industrial sector," said Neal Elliott, associate director for Research at the American Council for an Energy-Efficiency Economy. "These provisions will provide an important short-term boost to new and underutilized energy efficiency technologies to help establish them in the marketplace."
Commented Jessica Bridges, executive director on behalf of the U.S. Clean Heat & Power Association: "CHP technology can be deployed quickly, cost-effectively and with few geographic restrictions. Strengthening the existing ITC for CHP will significantly advance cleaner energy generation in the U.S., benefit the environment, and put people to work – now.''
The bill has been referred to the Senate Finance Committee; Bingaman and Snowe serve on that panel.
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Edited by Braden Becker