Homeowners who install modern wood heating systems can now get a new tax credit, under the federal omnibus bill passed late last year.
New Hampshire’s Congressional delegation supported the measure, which the state’s timber industry has wanted for years.
The credit applies to home heating systems such as stoves and boilers that run on cordwood, wood chips or wood pellets, with a federal rating of at least 75% efficiency.
These systems can cost thousands - or tens of thousands - of dollars up front, but are cleaner and cheaper than fossil fuels over time.
With the new credit, homeowners who install one of these systems can take 26% of the installation cost off their tax liability for 2021. The credit steps down to 22% in 2022 and 2023.
Charlie Niebling runs a timber consulting firm, Innovative Natural Resource Solutions, in Concord. He has lobbied for the new credit for more than a decade and argues that wood heat is an important alternative to imported fossil fuels, grown and processed here in New Hampshire.
"Our message to Congress for years has been...don't pick winners and losers,” he said. “[Wood heat] deserves the same recognition in the federal tax code that solar and wind do."
Niebling says years of similar tax credits have increased competition and brought down prices for these other renewables, while wood heat remains more expensive and under-utilized.
“We’re hopeful that this new credit in 2021 will jumpstart consumer interest once again, during an era of relatively low oil and propane costs."
Heating is a main driver of emissions and high energy costs in New Hampshire, where both wood stoves and oil heat are more commonly used than in most other states.
Wood creates more emissions than zero-carbon energy sources when burned, including particulates that can have harmful health effects. Winter use of wood stoves sometimes prompts air quality alerts in certain parts of New Hampshire.
But wood is also considered renewable, since trees can be replanted – and it burns more cleanly than fossil fuels like heating oil, especially in the efficient systems that this tax credit covers.
New Hampshire currently offers a state-level rebate of 40% or up to $10,000 for wood boiler installations of at least 80% efficiency.
Niebling said the new federal credit could help more low-income and rural homeowners upgrade from less healthy, older wood stoves and pricier oil heat, especially where natural gas or all-electric heat alternatives aren’t readily available.
He hopes Congress will pass a version of the tax credit for businesses in the future.