Washington (Platts)--12Apr2010/629 pm EDT/2229 GMT

A coalition of almost 90 industrial companies, environmental groups and associations Monday urged the US Congress to pass legislation that would increase federal tax incentives for certain generation projects that make industrial manufacturing more energy efficient.

The coalition, spearheaded by Westmont, Illinois-based Recycled Energy Development, wrote chairmen and ranking members on the Ways and Means Committee of the US House of Representatives and the Senate Finance Committee to push for tax incentives for waste energy recycling and combined heat and power projects.

The letter says that combined heat and power projects now receive only a 10% investment tax credit for the first 15 MW of projects which generate 50 MW or less. Recycled energy projects currently receive no tax incentives.

The coalition urges Congress to pass legislation which would extend the CHP credit to the first 25 MW and eliminate the 50-MW cap. The legislation (S.B. 1629) introduced by Democratic New Mexico Senator Jeff Bingaman and Republican Senator Olympia Snowe of Maine, as well as that from Republican Democrat Jay Inslee of Washington (H.R. 4144) contain such provisions.

They also wrote in support of New York Democratic Representative Paul Tonko's bill (H.R. 4751), which would provide a 30% investment tax credit for CHP and recycled energy projects with more than 70% efficiency.

Recycled Energy Development provides "turnkey" energy efficiency projects for industrial customers' waste energy and converts it into clean power and processed heat.

Dick Munson, a senior vice president for Recycled Energy Development, said in an interview Monday that while there have been federal energy efficiency incentives for the residential and commercial building sectors, "there wasn't a lot of attention being paid to the manufacturing core.

"If they can reduce their energy cost and increase their competitiveness, it's a real advantage," Munson said.

He said that in the current economic environment, it is difficult to get financing for industrial-level projects that recycle waste energy. He pointed out that while the stimulus bill included about $156 million for a grant program to spur these types of investments, about $9 billion in applications poured in.

The coalition included large manufacturers such as Caterpillar and Dow Chemical; energy companies like LS Power and Nevada Energy; conservation groups such as Alliance to Save Energy and the Sierra Club; and large associations such as the Electricity Consumers Resource Council and American Forest and Paper Association.

--Jason Fordney, jason_fordney@platts.com