Bill Overview
Title: HEATR Act
Description: This bill allows a new tax credit through 2031 for energy efficient consumer and commercial heat pumps and heat pump water heaters.
Sponsors: Sen. Klobuchar, Amy [D-MN]
Target Audience
Population: People and businesses using or considering using heat pumps and heat pump water heaters
Estimated Size: 5000000
- The bill specifically impacts users of heat pumps and heat pump water heaters.
- The bill targets both consumer and commercial sectors, indicating individuals, households, and businesses will be affected.
- The focus on energy efficiency suggests it will mainly impact those interested in reducing energy costs and emissions.
- Tax credits will primarily attract middle to upper income individuals or businesses that have taxable income to offset, as they benefit most from tax credits.
- The global market for heat pumps is growing, especially in regions focusing on renewable energy and reducing energy consumption.
Reasoning
- The HEATR Act’s tax credits are most beneficial to those who can afford the upfront costs of installing or upgrading to energy-efficient heat pumps and water heaters, often middle to higher income brackets.
- Businesses may see a significant improvement in cost efficiency over time, leading to better energy management and reduced operational costs.
- Lower-income households or renters may not directly benefit as they may lack the capital to invest initially in heat pumps, nor would they have the tax liabilities to significantly benefit from credits.
- The policy may drive increased market demand for heat pumps, potentially leading to lower prices due to competition but limited by installation and maintenance costs.
- Geographic areas with harsher winters may see more pronounced impacts on wellbeing due to greater efficiency needs and savings in energy costs.
Simulated Interviews
Small Business Owner (Portland, Oregon)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- I like the idea of tax credits for energy efficiency as it aligns with my values.
- However, as a renter, I'm concerned about how little control I have over installing heat pumps in my business space.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Engineer (Chicago, Illinois)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This initiative definitely motivates me to consider switching to a heat pump.
- It's a big investment upfront, but the long-term savings and tax credits are enticing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Retired (Miami, Florida)
Age: 54 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- I'm on a fixed income, so tax credits aren't much use to me without the cash to invest in the first place.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Tech Entrepreneur (Austin, Texas)
Age: 38 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- Anything that makes sustainable living easier gets my support.
- I'm excited to get a heat pump and these tax credits are icing on the cake.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Student (Boulder, Colorado)
Age: 27 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- Right now, I'm focused on paying tuition. I can't think about heat pumps yet.
- Maybe in the future, if I own a place and if the incentives are still around.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
School Teacher (Atlanta, Georgia)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- Energy bills are eating into my budget more and more.
- I plan to make use of the tax credits to transition to a heat pump when my current system needs replacing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Farmer (Boise, Idaho)
Age: 62 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- Farming profits vary year to year, and I like the idea of reducing overhead costs.
- I'll need to weigh if the initial investment in heat pumps is feasible right now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Architect (San Francisco, California)
Age: 44 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy is great for the environment, but limited for renters like me.
- Hopefully it drives broader adoption and better policies in the future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Financial Analyst (New York, New York)
Age: 36 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- These credits could be valuable if the building management takes action.
- Heat pumps make sense alongside other building upgrades.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Home Improvement Contractor (Phoenix, Arizona)
Age: 41 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- This policy boosts business opportunities for me.
- Tax credits will make it easier to convince clients to go for heat pump installations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $500000000 (Low: $450000000, High: $550000000)
Year 2: $550000000 (Low: $500000000, High: $600000000)
Year 3: $600000000 (Low: $550000000, High: $650000000)
Year 5: $700000000 (Low: $650000000, High: $750000000)
Year 10: $750000000 (Low: $700000000, High: $800000000)
Year 100: $800000000 (Low: $750000000, High: $850000000)
Key Considerations
- The bill covers both consumer and commercial heat pumps, indicating a broad target market.
- The limited duration through 2031 means cost concentration is within these years, affecting the estimate's timeframe.
- Behavioral changes and consumer response to the tax credits are uncertain and affect cost and savings estimates.
- The balance between immediate tax credit costs and long-term energy efficiency gains and economic activity is critical.