BTU Act of 2021

To amend the Internal Revenue Code of 1986 to include biomass heating appliances in the energy credit and to extend the credit for residential energy efficient property. 1. Short title This Act may be cited as the Biomass Thermal Utilization Act of 2021 BTU Act of 2021 2. Investment tax credit for biomass heating property (a) In general Section 48(a)(3)(A) (1) by striking or (2) by adding or (3) and by inserting after clause (viii) the following new clause: (ix) open-loop biomass heating property (within the meaning of section 45(c)(3)) heating property, including boilers or furnaces that operate at thermal output efficiencies of not less than 75 percent (measured by the lower heating value of the fuel at nominal output), that are installed indoors, and that provide thermal energy in the form of heat, hot water, or steam for space heating, air conditioning, domestic hot water, or industrial process heat, . (b) Open-Loop biomass heating property defined Section 48(c) (6) Open-loop biomass heating property (A) In general The term open-loop biomass heating property (i) uses open-loop biomass (as defined in section 45(c)(3)) to produce thermal energy in the form of heat, hot water, hot air, or steam, and (ii) is used for space heating, air conditioning, domestic hot water, industrial process heat, or any combination of the foregoing. (B) Requirements for boilers and furnaces Such term shall not include any boiler or furnace unless such boiler or furnace— (i) operates at thermal output efficiencies of not less than 75 percent (measured by the lower heating value of the fuel at nominal output), and (ii) is installed indoors. . (c) Energy percentage Section 48(a)(2)(A)(i) of such Code is amended— (1) by striking and (2) by adding at the end the following new subclause: (VI) open-loop biomass heating property, but only with respect to property the construction of which begins before January 1, 2029, and . (d) Effective date The amendments made by this section shall apply to periods after December 31, 2020, in taxable years ending after such date, under rules similar to the rules of section 48(m) 3. Extension of residential energy efficient property credit (a) In general Section 25D(h) December 31, 2023 December 31, 2028 (b) Application of phaseout Section 25D(g) of such Code is amended— (1) by striking before January 1, 2023 before January 1, 2022 (2) by striking and (3) by redesignating paragraph (3) as paragraph (5) and by inserting after paragraph (2) the following new paragraphs: (3) in the case of property placed in service after December 31, 2021, and before January 1, 2027, 30 percent, (4) in the case of property placed in service after December 31, 2026, and before January 1, 2028, 26 percent, and , and (4) by striking December 31, 2022, and before January 1, 2024 December 31, 2027, and before January 1, 2029 (c) Effective date The amendments made by this section shall apply to expenditures made after the date of the enactment of this Act.

Summary: Biomass Thermal Utilization Act of 2021 or the BTU Act of 2021 This bill expands the 30% energy tax credit to include open-loop biomass heating property and extends the residential energy efficient property tax credit for five years. The bill defines open-loop biomass heating property as any property that uses open-loop biomass to produce thermal energy in the form of heat, hot water, hot air, or steam and is used for space heating, air conditioning, domestic hot water, or industrial process heat, but does not include any boiler or furnace unless they operate at thermal output efficiencies of at least 75% and are installed indoors.