Groups Lobby for Passage of CHP-Friendly Bills in Congress

Nearly 90 business, labor, environmental, and government organizations urged Congress on Monday to adopt new tax policies to enhance industrial energy efficiency in order to simultaneously increase manufacturing competitiveness, create jobs, and reduce pollution.

The diverse set of organizations sent letters to the Senate Finance Committee and the House Ways and Means Committee asking for tax credits to expand use of combined heat and power (CHP) and waste energy recovery, which would vastly improve energy efficiency. While often overlooked in the search for improved efficiency, manufacturers consume vast quantities of energy, usually finding it to be one of their largest production costs. Indeed, these technologies often double the efficiency of an industrial plant.

The group is asking for passage of the bipartisan S. 1639 (sponsored by Senators Jeff Bingaman, D-NM, and Olympia Snowe, R-ME) as well as H.R. 4144 (Rep. Jay Inslee, D-WA) and H.R. 4751 (Rep. Paul Tonko, D-NY) to encourage near-term, shovel-ready projects that will create and maintain thousands of jobs within the industrial sector and in the manufacture, installation, and operation of CHP and waste energy recovery equipment.

“The industrial sector is a huge consumer of power, yet doesn’t get sufficient attention in the quest for energy efficiency. Manufacturers that recycle their waste energy are typically able to cut their energy expenses by about 20 percent, reaping huge savings on a core operating cost while drastically reducing greenhouse gas emissions,” said Tom Casten, chairman of Recycled Energy Development.

According to the Oak Ridge National Laboratory, a large-scale expansion of CHP could provide 20 percent of U.S. generating capacity by 2030, generate $234 billion in new investment, and create nearly one million highly skilled, technical jobs throughout the U.S. Such an expansion would reduce CO2 emissions by more than 800 million tons per year, the equivalent of taking more than half the current U.S. passenger vehicles off the road.

The legislation would help small businesses put workers back on the job.

“These tax credits and grants will provide the right incentives to quickly get our men and women back to work rebuilding America in every state,” said John Lindemulder, chairman of Amber Mechanical Contractors in Alsip, Ill. and president of the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA). “Since more than 90 percent of the construction firms that will be building and installing energy recycling equipment employ fewer than 20 people, these measures will be a boon to small businesses around the country that have been hardest hit by the economic downturn.”

Many companies have already experienced energy savings from CHP. Since 1994, The Dow Chemical Company’s energy efficiency program has saved more than 1,700 trillion Btus, equivalent to the power needed to generate electricity for all residential homes in California for one year. New and upgraded CHP units are responsible for a significant share of these energy savings, which have saved the company an estimated $9 billion.

“CHP is an energy saving process that Dow Chemical has used successfully for a century. This approach must be encouraged to reduce pollution and improve domestic manufacturers’ ability to compete globally,” said Doug May, Dow Chemical vice-president of energy.

The gains would be no less dramatic for American workers.

“The Sheet Metal Workers International Association (SMWIA) and their industry partners, SMACNA, have a long and proud history of designing, fabricating, and installing world class pollution control and power generation systems. We fully support this proposed legislation because it’s a force for job creation, as every industrial job supports an average of three jobs elsewhere,” said Michael J. Sullivan, president of SMWIA.

At the same time, these bills help America establish a new clean energy policy. “Industrial energy efficiency is critical for America’s energy policy. Eliminating energy waste in our factories should be a centerpiece of an energy policy that reduces dependence on foreign sources of energy and makes America more competitive,” said David Terry, executive director, National Association of State Energy Officials.

Waste energy recovery, which captures waste energy from industrial facilities, now receives no tax benefits. CHP, a process by which manufacturers generate electricity and heat on site, obtains only a 10 percent investment tax credit for the first 15 megawatts of a project limited to 50 megawatts in size. The bills now in the House and Senate would remove the limitation to small projects and apply the tax credit to a project’s first 25 megawatts (S. 1639 and H.R. 4144), as well provide a 30 percent credit for recycled energy and CHP with efficiencies above 70 percent (H.R. 4751).

Source: Recycled Energy Development