The Geothermal Exchange Organization (GEO) has formally urged Congress to extend federal tax credits for residential and commercial geothermal heat pump (GHP) installations. The credits currently expire at the end of 2016, and GEO seeks their extension through 2020.

“Buildings are the largest single sector of total U.S. energy consumption. GHPs can efficiently and significantly reduce the heating and cooling loads of buildings, with positive benefits for our environment and economy,” GEO President and CEO Doug Dougherty said in comments to the U.S. House of Representatives Ways and Means Committee in mid-April.

“Yet even though GHPs could achieve vast energy, economic and environmental benefits across America if installed for all suitable buildings, the technology is still relatively nascent and has been slow to catch a foothold in the broader HVAC market.”

Dougherty’s comments come amid ongoing discussions about budget cuts and tax reform.

“At current rates of installation,” he continues, “GHPs represent less than 2 percent of the total HVAC marketplace. Reason? Higher ‘first cost’ incurred by drilling or excavation to place its ground-source heat exchange loop system near the building(s) which a GHP system serves.

“With their life-cycle energy cost savings, these tax provisions make GHP systems more attractive to both residential and commercial HVAC consumers. Since their inception, the federal tax credits and commercial bonus depreciation for GHP installations have effectively helped reduce the consumer shock of higher first cost for system installations.”

Dougherty says the tax credits are improving sales, expanding market share within the HVAC sector, creating jobs and saving consumers money through more efficient energy use. Extending the credits, he adds, will help the GHP industry move to a 20 percent market share and beyond the need for federal support.

“In the interim, Congress can help the GHP industry achieve greater market share by extending IRS Code sections 25D and 48(a) to the end of 2020,” Dougherty concluded.