[Congressional Record Volume 153, Number 171 (Tuesday, November 6, 2007)]
[Senate]
[Pages S13998-S13999]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SALAZAR (for himself, Mr. Inhofe, and Mr. Tester):
  S. 2314. A bill to amend the Internal Revenue Code of 1986 to make 
geothermal heat pump systems eligible for the energy credit and the 
residential energy efficient property credit, and for other purposes; 
to the Committee on Finance.
  Mr. SALAZAR. Mr. President, today I am joining my colleague Senator 
Inhofe in introducing 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.
  Buildings account for 39 percent of the primary energy consumption in 
the U.S. and 71 percent of U.S. electricity consumption. The lion's 
share of this energy usage is for heating, cooling, and hot water. 
Making our buildings more energy efficient will therefore pay large 
energy dividends. According to the Environmental Protection Agency, 
GHPs are the most energy-efficient and environmentally clean space-
conditioning systems currently in use. GHPs can reduce site energy 
consumption for climate control and water heating by as much as 40 
percent compared to air-source heat pumps and as much as 70 percent 
compared to a fossil fuel heating system and air-conditioner.
  However, in the absence of Federal tax credits to help mitigate the 
comparatively high installation costs associated with geothermal heat 
pump systems, American homeowners and businesses are reluctant to tap 
into this reliable 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.
  Specifically, businesses could claim an investment tax credit in the 
amount of 10 percent of the installed cost of a new geothermal heat 
pump system, and could claim an accelerated 3-year depreciation on such 
equipment. For example, a business owner that spends $30,000 on a new 
GHP system would get a $3,000 tax credit and the accelerated 
depreciation provision would allow that business greater flexibility in 
reporting this capital expense. Consumers could claim a 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, so that, for example, a 
home owner who purchases a $15,000 GHP system would receive a $2,000 
tax credit. This consumer tax credit would be allowable against the 
alternative minimum tax.
  Geothermal heat pumps are proven renewable energy technologies with 
significant energy efficiency gains and

[[Page S13999]]

long-term cost-savings potential compared to conventional climate 
control systems. Geothermal heat pumps typically cost more than twice 
as much as a conventional fossil fuel furnace, but GHPs' impressive 
efficiency gains allow a home or business owner to recoup their up-
front costs within about ten years.
  Since their introduction in the 1980s, over 1 million GHPs have been 
installed in a wide variety of buildings, and in a diverse range of 
climates, across the U.S. Senator Inhofe and I are optimistic that the 
widespread adoption of geothermal heat pumps will not only save energy, 
but also create good local jobs. Because GHP systems can be deployed 
virtually anywhere, the demand for qualified engineers who can install 
and maintain these systems would surely expand.
  Geothermal heat pumps should be an important element of our efforts 
to enhance our buildings' energy efficiency. By making it easier for 
American homes and business to embrace these extremely effective energy 
technologies, we will help develop a more secure, efficient and 
sustainable domestic energy program founded on clean, renewable and 
reliable energy alternatives.

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