Ample natural gas heats up large tax incentives for gas-powered fuel equipment

EPAct-tax option

Under Section 179 (D) of the Energy Policy Act (EPAct) and its underlying ASHRAE (American Society of Heat Refrigeration and Air Conditioning), which builds energy code, commercial buildings are eligible for an energy efficiency tax deduction of up to $ 1.80 per . Square feet.

If a building’s energy-reducing investment does not qualify for the full $ 1.80 deduction. Square feet, there are deductions available for one of the three major subsystems: lighting, plumbing and the building envelope. Each component can qualify for up to 60 cents per unit. Square foot EPAct tax deduction. The building envelope is everything on the perimeter of the building that touches the outside world, including roofs, walls, windows, doors to the foundation and associated insulation layers. Increased availability of natural gas creates new potential for HVAC EPAct deductions as more options for high-efficiency gas heating systems become increasingly popular.

The combined heat and power tax credit

Under the Internal Revenue Code, Section 48, companies or individuals installing combined heat and power (CHP) systems can take a 10% tax credit for the total equipment and installation costs. In addition, sections 1104 and 1603 of the 2009 Recovery and Reinvestment Act of 2009 allow the taxpayer to take the 10% tax deduction as a cash subsidy, although eligibility is contingent upon the construction of the CHP system beginning before the end of the year 2010 The requirements for “beginning construction” have not always been clear; However, the Treasury recently released guidance that officially explains the requirements for taking a cash grant instead of a tax credit.

The new natural gas finds

The recent and unexpected U.S. boom of natural gas reserves can be summed up by the 200 trillion cubic foot Louisiana gas find called the Haynesville Shale. A finding of this magnitude corresponds to 18 years of current U.S. production. Another surprisingly enormously strategically located find is the Marcellus Shale Appalachian (“The Marcellus”) find. Marcellus is primarily located in Ohio, Pennsylvania, West Virginia and New York. Parts of this huge find touch Virginia, Maryland, Tennessee and Kentucky. Other major new finds have also occurred in Texas and Arkansas. One industry-produced study estimates that the U.S. has more than 2,200 trillion cubic feet of gas ready for extraction, which is enough to deliver 100 years. Less than a decade ago, the consensus was that natural gas production was on a permanent decline. And was becoming a dying resource.

The big companies allow

The expected major impact of the recent discoveries is evidenced by the recent commitment to the large gas companies’ natural gas sector. In late June 2010, ExxonMobil completed its merger with XTO Energy. It is now expected that Exxon will be a player in the development of renewable resources, especially natural gas, under the XTO name. Royal Dutch Shell and Total SA also recently bought assets after purchasing East Resources and part of Chesapeake Energy, respectively. As oil drilling becomes more inaccessible and the cost of gas development continues to decline, natural gas will become important for the oil and energy sectors of the United States.

Improved distribution of natural gas

The advantage of having huge new natural gas discoveries in several regions of the country is that it can be more easily distributed to larger markets. Eg. Marcellus finds a great place to supply the winter regions of New England and the major market areas that require winter warming, such as New Jersey, New York, Pennsylvania and Ohio.

On December 29, 2009, Spectra Energy announced the signing of natural gas supply agreements to New Jersey and New York with Chesapeake Energy Corporation, Con Edison and Statoil Natural Gas. In its first stages, this added system will connect to the existing Texas Eastern Transmission and Algonquin gas transmission lines. The project is expected to include a 16 mile pipeline extension connecting Staten Island to New York City and five miles of large diameter pipeline to New Jersey and New York.

Deduction in natural gas plumbing equipment

The two main HVAC equipment categories generating EPAct tax deductions are: 1. energy efficient heaters for non-air-conditioned, heated facilities such as warehouses and industrial buildings; and; 2. hybrid gas / electric coolers for conditioned buildings.

Direct fired natural gas heaters

Since lighting represents the majority of energy consumption in a non-air-conditioned room, when a property is considering a retrofit heating system, a property must be completed before or currently as a light upgrade for highly energy efficient fluorescent lamps, induction or LED lighting to maximize EPAct tax deduction.

Hybrid gas / electric coolers

A hybrid cooler conditioning a building that uses natural gas or electricity as alternative fuel sources. It is programmed to use gas in the summer months when electricity is more expensive and electricity in the winter months where gas is more expensive. Because a hybrid cooler benefits from on-time energy prices and seasonal gas and electricity prices to drastically reduce building energy costs, and EPAct tax deductions are governed solely by the overall reduction of building energy costs, the installation of a hybrid cooler will typically qualify for large immediate EPAct HVAC-tax deductions.

Combined heating and power systems

Combined heating and power systems, sometimes known as cogeneration plants, are capable of generating electricity while also producing thermal energy, essentially supplying usable heat from the waste heat emitted during the electrical production process. As cogeneration systems capture the waste heat, facilities that depend on cogeneration can eliminate redundancy in their systems, reduce overall energy consumption and lower overall building emissions. CHP systems are preferred by U.S. The Ministry of Energy and EPA because of their energy efficiency and reduction of greenhouse gases. Installing a CHP system will also help a company comply with EPA’s July 2010 pollution reduction proposal, which will affect 31 states and Washington D.C. Typically, natural gas is the fuel used in these highly energy efficient CHP plants. In addition, CHP facilities are eligible for the federal tax credit or cash support described above at 10%.


Huge new gas finds and improved gas distribution will allow building owners in cold winter areas, especially in the Northeast, to have insured supplies of natural gas. Informed property owners can use Section 179 (D) and 10% tax deductions or cash grants to reduce the cost of required heating equipment.