EXTENSIONS of REMARKS July 9, 1981 EXTENSIONS of REMARKS CONGRESSMAN TONY P

15270 EXTENSIONS OF REMARKS July 9, 1981 EXTENSIONS OF REMARKS CONGRESSMAN TONY P. HALL Tax Act of 1978. In its proposed regu mercially available to take advantage INTRODUCES BILL TO CLARIFY lations, the IRS decided to set an arbi of geothermal sources with a tempera GEOTHERMAL ENERGY TAX trary temperature requirement for eli ture below that set by the IRS. We are CREDITS gibility for the geothermal tax credits. not talking about some untested I was among those who testified energy source that will take years to HON. TONY P. HALL against this temperature requirement develop and then put on the market. at an IRS public hearing in Washing The equipment is there right now-we OF OHIO ton on September 12, 1979. only need to make it attractive and ec IN THE HOUSE OF REPRESENTATIVES Unfortunately, the IRS did not onomical to use. Thursday, July 9, 1981 follow the recommendations that were Energy from groundwater can be ex e Mr. HALL of Ohio. Mr. Speaker, made in opposition to a temperature tracted through the use of currently today I am introducing a bill to clarify requirement. In August 1980, the IRS marketed heat pumps, which operate the definition of geothermal energy issued final regulations concerning according to the same basic principles for tax credit purposes. I am pleased geothermal residential energy tax at work in a refrigerator. The pump that my colleague, Congressman DoN credits, and in January 1981, issued systems permit the temperature of the H. CLAUSEN, of California, is joining final regulations concerning geother shallow geothermal water to be either with me as the other original sponsor mal commercial facility tax credits. raised or lowered for heating or cool of this legislation. For both sets of credits, the IRS re ing purposes. Our bill basically contains three quired the geothermal source to have Using groundwater, a heat pump parts. The first would amend the defi a temperature of more than 50° C. system heats three to five times as ef nition of geothermal in the Energy This means that citizens who installed ficiently as a fossil-fuel system, in Tax Act of 1978 to make it explicit geothermal systems that tap sources terms of heat output per unit of that there is no temperature require with a temperature below 50° C, would energy put in. Although the heat ment for the geothermal tax credit for not qualify for the tax credits. pump is operated by electricity, the residences and commercial facilities. The Department of Energy and de actual heating or cooling energy in a The second part would specify how velopers and users of geothermal geothermal system is free and virtual energy have been opposed to the tem ly unlimited. the credit is to be determined when a perature limitation since the IRS reg residence or business has a system According to the National Water ulations were proposed over 2 years Well Association, a groundwater heat which uses both geothermal energy ago. Most of the potential geothermal and another source not eligible for the pump system can pay for itself in 2 to energy use in the eastern half of the 4 years, if a well is already in place. credit. The final part of the bill makes United States would involve resources it clear that the definition adjust Even if a well must be drilled, the with a temperature of less than 50° C. system will pay for itself in 4 to 8 ments run with the life of the energy The IRS limitation has the effect of tax credits themselves, meaning that eliminating a significant portion of the years. The National Water Well Asso the changes would have a retroactive geothermal resources of the country. ciation further states that it is not effect and would expire when the The Miami Valley of Ohio is incred aware of any groundwater heat pump credits themselves expire. ibly rich with underground rivers that system that has ever stopped run The Energy Tax Act of 1978 provid make it an ideal place to utilize geo ning-even after more than 25 years of ed for a tax credit of $2,200 of the first thermal energy. These streams, which service. $10,000 spent for the installation of run below the Great Miami, the Still Those of us who have been interest residential solar, wind, and geothermal water, and the Mad Rivers, all con ed in promoting the more widespread energy equipment. A provision of the verge on the center of Dayton, provid application of geothermal energy had Crude Oil Windfall Profit Tax Act ing a nearly unlimited energy source hoped that the IRS might be persuad raised the maximum credit to $4,000 for downtown buildings. Unlike the ed to change its position on the tem or 40 percent of the first $10,000 of eli aquifers in some areas, Dayton's un perature requirement for the geother gible energy equipment. The Energy derground rivers are easy to tap be mal tax credits. The IRS has contin Tax Act also provided for a 10-percent cause they are not blocked by bedrock. ued to hold the view that a minimum tax credit for investment in solar, In addition, they are located at rela temperature rule is necessary in order wind, and geothermal energy equip tively shallow depths of 50 to 100 feet. to assure that energy from a geother ment used by businesses. The 50° C. temperature requirement mal source means energy derived from For tax purposes, the Energy Tax does not reflect congressional intent underground sources and not just heat Act of 1978 defined geothermal energy or scientific fact. Geothermal energy associated with atmospheric tempera in the following way: is the natural heat of the Earth. The ture. In the opinion of the IRS, heat The term "geothermal deposit" means a heat in water, soil, or rock close to the from low-temperature groundwater is geothermal reservoir consisting of natural surface of the Earth is derived from solar heat, and not eligible for the geo heat which is stored in rocks or in an aque both solar and geothermal energy. thermal tax credit. Since it is now un ous liquid or vapor <whether or not under Equipment that uses either solar or likely that the IRS is going to change pressure). geothermal energy, or both, is eligible this view, my colleague from Califor The law set no temperature require for the residential and business energy nia and I are introducing a bill to clari ment in its definition of geothermal tax credits of the Energy Tax Act of fy the definition of geothermal energy energy. Acting in good faith, many 1978. Therefore, it should not matter for tax credit purposes. citizens invested in geothermal energy whether the source of the heat in The IRS policy of disallowing the systems to tap shallow geothermal shallow water sources is geothermal or credit for systems which use both geo wells which they assumed would qual solar. Further, at depths of more than thermal energy and another energy ify for the credits. a few dozen feet, the heat is essential source also is inconsistent with the The Internal Revenue Service pro ly entirely of geothermal origin. intent of Congress and ignores sound posed regulations to implement the I think it is important to point out engineering practice in the use of geo tax credit provisions of the Energy that the technology is presently com- thermal energy. e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor. July 9, 1981 EXTENSIONS OF REMARKS 15271 Geothermal energy systems often in to a hydrothermal source of any tem percent supplied by geothermal energy <on clude peaking systems fueled by fossil perature when it is used for heating or an annual BTU basis)." energy. The fossil energy will typically cooling. (C) CONFORMING AMENDMENTS.- range from 3 percent or 4 percent to We need to remove the bureaucratic (1) Clause (ii) of section 44C(c)(2)(B) of such Code is amended by striking out "any 20 percent of the annual total energy roadblock by the IRS which is pre geothermal deposit" and inserting in lieu load. The extra wells, pipe, and pump venting incentives to more widespread thereof "geothermal energy". capacity required for a geothermal use of available geothermal technolo (2) Clause (i) of section 44C<c><5><A> of system designed to be 100 percent geo gy. We should make it attractive for such Code is amended by striking out thermal on the few coldest days of the more homes and businesses to take ad "energy derived from the geothermal depos year would add too much to system vantage of the geothermal resources its" and inserting in lieu thereof "geother cost to be attractive. of this Nation. Truly, the ground on mal energy". Geothermal resources in many in which we stand holds part of the solu (3) Clause <viii> of section 48(1)(3)(A) of stances may not be hot enough to tion to our energy problems. such Code is amended by striking out "energy derived from a geothermal deposit" fully satisfy a particular industrial The gentleman from California and and inserting in lieu thereof "geothermal process requirement, but by adding a I urge our colleagues to cosponsor this energy". few degrees to the heat from geother bipartisan bill and to join with us in <4> Clause (ii) of section 57(a)(ll)(D) of mal energy, it will often be possible to encouraging the House Ways and such Code is amended to read as follows: replace a large fraction of the oil or Means Committee to act favorably on "(ii) all geothermal properties." gas use in a plant or other facility.

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