Waste Heat Recovery: Ambitious Bills Aim to Improve Industrial Energy Efficiency

Recently, several champions of energy efficiency introduced three separate bills in the House of Representatives – H.R. 2812, H.R. 2750 and H.R. 2784 — that could facilitate waste heat recovery (WHR) projects to enhance American industrial competitiveness.

On Aug. 5, 2011, a bipartisan set of sponsors – Reps. Paul Tonko (D-N.Y.), Shelly Berkley (D-Nev.), Jay Inslee (D-Wash.) and Ron Paul (R-Texas) – introduced H.R. 2812, the Heat is Power Act.  This bill aims to help American industry become more efficient and competitive by encouraging greater adoption of a class of WHR technology.

That month another bipartisan group made up of Reps. Inslee, Tammy Baldwin (D-Wis.), Roscoe Bartlett (R-Md.), Shelley Berkley (D-Nev.), Earl Blumenauer (D-Ore.), Steve Israel (D-N.Y.), Bill Pascrell (D-N.J.), Mike Quigley (D-Ill.), Betty Sutton (D-Ohio) and Paul Tonko introduced H.R. 2750 to modify the investment tax credit for combined heat and power (CHP) systems to include certain WHR investments. Also in August, Tonko, Inslee, Berkley and Blumenauer introduced H.R. 2784, the Innovative Energy Systems Act of 2011, to encourage the deployment of highly efficient CHP systems.

Why Recover Waste Heat?

Many industrial processes require significant heat treatment. As a result, many industrial plants generate large amounts of heat from chemical reactions and burning fuel. The unused excess or waste heat from these processes is typically released into the environment via exhaust gas or coolant water.   These waste heat streams often contain significant amounts of energy that can be usefully recovered to pre-heat process materials and combustion air or to generate steam or electricity. In the United States, fuel-based process heating (excluding electricity and steam generation) consumes approximately 5 quadrillion Btu annually – about 5 of U.S. energy use – of which as much as 50% is exhausted.¹

While capturing excess heat is not a new idea, implementation of WHR has been uneven. This is partly because recapturing low- to mid-temperature waste heat has not always been cost-effective or technically feasible. However, some technological advances, such as improved Organic Rankine Cycle (ORC) systems, which allow electric power generation from moderate temperature waste heat streams,   have opened the door to significant WHR opportunities.

In addition to saving fuel and money by improving energy efficiency, WHR can improve furnace or boiler productivity, contribute to more consistent product quality and enhance equipment reliability. Further, WHR can reduce polluting emissions. One example of a well-designed project to improve process heating heat recovery occurred at a Dow Chemical plant in Houston, Texas (formerly a Rohm and Haas facility).

How these Bills Can Benefit Industrial Plants

The Heat is Power Act would amend the Internal Revenue Code of 1986 (26 U.S.C.) in two places to extend the coverage of two types of tax credits to “wasted heat to electricity” properties.

• Section 48 would be amended to make wasted-heat-to-electricity equipment eligible for a 30% investment tax credit. The section now authorizes tax credits for certain renewable energy, fuel cell, microturbine and CHP equipment.
• Power generated by wasted-heat-to-electricity equipment and sold to a third party would be made eligible for the renewable electricity production tax credit authorized in Section 45 of the Internal Revenue Code.

While the Heat is Power Act would only cover WHR in which electricity is generated, numerous industries could benefit from the proposed legislation, especially those with heat intensive processes, such as steelmaking, metal casting, glass making, food and beverage processing, chemical manufacturing, and petroleum refining.
The other acts would amend the Internal Revenue Code as well:

• H.R. 2750 would extend applicability of the existing Section 48 investment tax credit for CHP to include WHR. This would expand greatly the type and number of facilities and WHR investments that would be eligible for a 10% tax credit.
• The Innovative Energy Systems Act, H.R. 2784, would alter Section 48 by raising the 10% investment tax credit for qualifying CHP systems to 30% for highly efficient systems that achieve at least 70% energy efficiency.

These three bills would incentivize WHR and CHP investments that can enhance efficient use of resources, reduce pollution and improve the competitiveness of American industry.