Industrial Leaders Call for Green Tax Incentives

Some of manufacturings most powerful corporations, flanked by labor, environmental and government organizations, are pushing Congress to enact new tax policies to help stimulate energy efficiency projects in industrial facilities.

Nearly 90 organizations, including Caterpillar, Dow Chemical, GE Energy and Ingersoll Rand, signed letters this week sent to members of the Senate Finance Committee and the House Ways and Means Committee asking for support of tax credits to expand use of combined heat and power (CHP) and waste energy recovery.

Both houses of Congress are currently weighing revisions to tax credits for energy-related industrial efficiency investment. A Senate bill, proposed by Jeff Bingaman (D-N.M.) and Olympia Snowe (R-ME), would update IRS codes from 25 years ago on incentives for deploying projects to better utilize heat and power.

The industrial sector is a huge consumer of power, yet doesnt get sufficient attention in the quest for energy efficiency, said Tom Casten, chairman of Recycled Energy Development, an organization which aids companies in reducing their energy costs and maximize efficiency. Manufacturers that recycle their waste energy are typically able to cut their energy expenses by about 20%, reaping huge savings on a core operating cost while drastically reducing greenhouse gas emissions.

According to the Oak Ridge National Laboratory, a large-scale expansion of CHP could provide 20% of U.S. generating capacity by 2030. Dow Chemical, for example, has saved more than 1,700 trillion BTUs since 1994, a significant portion of which comes from upgraded CHP units.

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

Waste energy recovery systems, which captures waste energy from industrial facilities, currently receives no tax benefits. CHP, a process by which manufacturers generate electricity and heat on site, obtains only a 10% 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 projects first 25 megawatts, as well provide a 30% credit for recycled energy and CHP with efficiencies above 70%.