Friday, December 18, 2015

Wood Heater Tax Credit set to Expire on Dec. 31, 2016

Labs now test wood and pellet stoves
for efficiency but some manufacturers
ignore those tests and tell consumers
their stove are 75% efficient and
thus qualify for the $300 tax credit.

Updated on Nov. 18, 2016 - Republican leaders on Capitol Hill say they do not intend to consider a tax extenders bill, that could have extended the $300 tax credit for wood and pellet stoves into 2017.  Currently, that credit is set to expire on Dec. 31, 2016.  Next year, a tax reform package could revive a wood and pellet stove tax credit, and make it retroactive to Jan 1, 2016.

Renewable energy and energy efficiency incentives appear less likely under a Trump administration with both houses of Congress controlled by Republicans.  A $300 tax credit for stoves was not significant enough to really tip the scales for that many consumers, and when it did they were just as likely to buy a very low efficiency stove, due to misleading advertising by most stove manufacturers claiming that nearly all of their units are 75% efficient.  This loophole that industry created has diminished support for the stove tax credit among key energy efficiency groups and may reduce its chances of being included in a bill in 2017.

Dec. 18, 2015 - The United States Congress passed a massive omnibus spending bill to fund the government and provide tax breaks to businesses and individuals.  Among them is the $300 tax credit to purchase a wood heating appliance.  The bill extends that credit through Dec. 31, 2016 and is retroactive to Jan. 1, 2015.

In a far more widely anticipated move, Congress extended the 30% tax credit for residential solar PV panels through 2019 and then gradually reduce it.  This credit was set to expire at the end of 2016 and offers that industry a level of support and certainty for strong growth.

For wood and pellet heaters, the bill extends the $300 tax credit, contained in Section 25C of the IRS tax code, which states taxpayers are entitled to a $300 tax credit for the purchase of a wood or pellet heating appliance that is 75% efficient or greater.  Consumers need to obtain a certificate from the manufacturer, stating that the appliance is qualified for the credit.

For consumers who purchased a wood or pellet stove in 2015, or who will do so in 2016, they will likely be entitled to the $300 credit if they have not used up their $500 lifetime maximum credit for energy efficient property. 

Wood and pellet stove manufacturers routinely mislead the public by claiming that virtually every single stove they make is at least 75% efficient, flouting the letter and intent of the law, which was to only qualify stoves at 75% efficiency or higher. As of May 15, 2015 all stoves and boilers certified in the US are tested for efficiency using the CSA B415.1-10 efficiency test.  This efficiency test provides a guideline for how to test and not all stoves will achieve an efficiency of 75%.

“Higher efficiency wood and pellet heaters deserve renewable energy incentives to help American families reduce reliance on fossil fuels and to encourage companies to build higher efficiency appliances,” said John Ackerly, President of the Alliance for Green Heat, an organization that advocates for wood and pellet heating. “In the past, some in industry has made a mockery of this tax credit, misleading tens of thousands of consumers into thinking they are buying higher efficiency stoves.  Its time to start measuring efficiency and reporting it honestly and only qualifying those heaters that are 75% efficient or higher,” Ackerly said.

The Alliance for Green Heat estimates that up to half of all wood and pellet stoves could meet the 75% efficiency threshold, giving consumers a wide range of choices.  Appliances that are 75% efficient using the European lower heater value (LHV) are usually between 69 – 71% efficient using the North American higher heating value (HHV).  A leading industry expert, Rick Curkeet concluded in a 2008 letter to an industry trade association that "the intent of the solid fuel appliance incentive program recently enacted by Congress is ... to require a minimum of 69.8% efficiency."

Stove manufacturers do not have to publicly disclose their efficiencies and very few of them doA few stove companies, such as Blaze King, Jotul, Kuma, Seraph, Travis, Woodstock Soapstone publicly disclose actual efficiencies of most of their models on the EPA website and almost all of those models appear to qualify for the tax credit.  The EPA considers higher heating value as a more accurate measure of efficiency for devices in the U.S. and therefore uses only those number on its list of EPA certified wood and pellet stoves.  

Unlike other heating and cooling appliances, prior to May 2015 wood and pellet heating appliances did not have to test or report efficiencies and there are still few accepted norms on advertising practices.  Websites and promotional materials of many major stove brands contain exaggerated efficiency claims, some of which may come from the company’s internal laboratory, not from a reputable, third party lab.  



Wednesday, December 9, 2015

Legislation repealing EPA wood heater regulations passes House of Representatives; Obama promises veto

29 Republican House members
sponsored the bill to repeal the new
EPA heater regulations
An energy bill passed the House of Representatives with an amendment that repeals the EPA’s new residential wood heater regulations.  The bill is not likely to pass the Senate and President Obama vowed to veto it, if it comes to his desk. 

(Feb. 2017 update: A similar bill, to repeal the EPA's wood heater regulations, was introduced again on Jan. 24, 2017 by Representative David Rouser and was referred to committee. Rouser represents a district on the coast of North Carolina, bordering South Carolina where very few people heat with wood.)

The 2016 passage of a bill that includes repealing the EPA’s residential wood heater regulations came as a surprise to most in the hearth industry, as well as in relevant state and federal agencies.

The bill, the North American Energy Security and Infrastructure Act of 2015, H.R. 8, was passed the House of December 3 with 240 Republican votes and 9 democrats.  In addition to core issues in bill, it repealed more than 20 energy and energy efficiency studies and programs, including the EPA’s wood heater regulations which “shall have no force or effect and shall be treated as if such rule had never been issued.”

The underlying bill, H.R. 1986, dubbed “the Stop EPA Overregulation of Rural Americans,” had 29 Republicans and no Democrat co-sponsors.  The sponsors of the bill are almost all from very rural parts of the country but members of Congress representing districts with the highest levels of wood heating did not co-sponsor the bill.  Most of the sponsors come from the southern half of the United States and likely reflect their deep-seated opposition to the EPA regulations generally.

Some of the sponsors of the bill refer to a “War on Rural America.”  One of the most vocal advocates for the bill, Congressman Jason Smith (R-MO-8) repeatedly says the EPA is regulating existing stoves, not just new ones. He said in a statement that there are 12 million stoves in 2.4 million homes, probably referring to the distinction between the estimated total of 12 million stoves and the 2.4 million homes that use wood or pellets as a primary heating source. 

None of the industry groups representing sectors of the hearth industry, including Hearth, Patio & Barbecue Association (HPBA), Biomass Thermal Energy Council (BTEC), and Pellet Fuels Institute (PFI), supported H.R. 1986, and it is unclear if any major company in the hearth industry supported the bill. One small Michigan company, Eco-Fab Industries that makes Eco-Maxx outdoor wood stoves which do not meet EPA emission regulations and cannot be sold in the residential market after Jan. 1, 2016, supports the bill.

Hearth industry leaders indicate that they are vested in broad parts of the NSPS and think that a judicial challenge to certain parts is the best strategy for the solution they want. 


HPBA had mounted a legislative push in 2014, urging members of Congress to sponsor H.R. 4407 that would have prohibited the EPA from setting emission regulations lower than 4.5 grams per hour.  (See AGH analysis of H.R. 4407Some of the members who supported H.R. 4407 became co-sponsors of H.R. 1986.

"Thousands of hard working industry, non-profit and agency experts put years of work into these regulations and they are truly a compromise of competing interests," said John Ackerly, President of the Alliance for Green Heat.  "If no major stakeholder group is supporting the repeal of the regulations, why is the House of Representatives voting to do that?" Ackerly added.