BTU Act of 2021
Bill: S.1191 | Sponsor: Sen. King, Angus S., Jr. (I-ME)
Policy area: Taxation

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.

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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Biomass Thermal Utilization Act of 
2021'' or the ``BTU Act of 2021''.

SEC. 2. INVESTMENT TAX CREDIT FOR BIOMASS HEATING PROPERTY.

    (a) In General.--Section 48(a)(3)(A) of the Internal Revenue Code 
of 1986 is amended--
            (1) by striking ``or'' at the end of clause (vii),
            (2) by adding ``or'' at the end of clause (viii), and
            (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) of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(6) Open-loop biomass heating property.--
                    ``(A) In general.--The term `open-loop biomass 
                heating property' means any property which--
                            ``(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'' at the end of subclause (IV), 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) of the 
Internal Revenue Code of 1986 (as in effect on the day before the date 
of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 3. EXTENSION OF RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT.

    (a) In General.--Section 25D(h) of the Internal Revenue Code of 
1986 is amended by striking ``December 31, 2023'' and inserting 
``December 31, 2028''.
    (b) Application of Phaseout.--Section 25D(g) of such Code is 
amended--
            (1) by striking ``before January 1, 2023'' in paragraph (2) 
        and inserting ``before January 1, 2022'',
            (2) by striking ``and'' at the end of paragraph (2),
            (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'' in paragraph (5) (as so redesignated) and inserting 
        ``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.
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