New York State has a goal of cutting climate pollution by 40-percent of 1990 levels by 2030, and 80-percent by 2050. Reaching these critical climate change goals will require New York to shift its entire economy off of fossil fuels and on to clean, renewable energy. Geothermal energy systems are positioned to play a big role in that transition.
The fossil fuel based systems currently in use to heat and cool residential and commercial buildings in New York represent 26-percent of the state’s greenhouse gas emissions. In contrast, climate pollution from fossil fuel-fired power plants make up less than 20-percent of greenhouse gas emissions, a number that has declined significantly in recent years due, in part, to state laws and policies supporting clean, renewable electricity and programs like the Regional Greenhouse Gas Initiative that limit carbon pollution from power plants. That same focus needs to be applied across all sectors.
This legislation would provide for personal income tax credits for the costs associated with investments in geothermal energy systems that are on par with those reserved for solar energy systems. Replacing a heating or cooling system is a big investment and a decision that is typically made when the system currently in place reaches the end of its useful life. Geothermal systems, while cost effective, efficient and cleaner than the fossil fuel systems they replace, do come with high upfront costs. Providing tax credits, combined with rebates, as the state has done with great success for solar over the years, will help ease “sticker shock” and encourage quicker adoption of a technology that promises to contribute enormously to the solution to our climate challenge.
This bill amends the tax law to allow for a personal income tax credit equal to up to 25-percent of qualified geothermal energy system expenditures. The credit is capped at $5,000. The credit will apply to taxable years commencing on and after January 1, 2018 and will apply to geothermal systems placed into service on or after September 1, 2018.