The New Energy Bill: Tax Deductions for Energy Efficient Construction and Renovation December 7,...
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Transcript of The New Energy Bill: Tax Deductions for Energy Efficient Construction and Renovation December 7,...
The New Energy Bill: Tax Deductions for Energy Efficient Construction and Renovation
December 7, 2005
Audio Seminar
Featuring
David GoldsteinEnergy Program Director
Natural Resources Defense Council
Joseph MikrutPartner
Capitol Tax Partners, LLC
Kyle PitsorVice President, Government Relations
National Electrical Manufacturers Association
What is the Deduction?
Tax Incentives for 50% Savings Compared to ASHRAE 90.1-2001 Baseline. 50% is ambitious but
achievable:
NRDC has achieved this goal and saved money in 6 out of 6 of our building renovations.
Availability of the Deduction
Incentive of a $1.80 per Square Foot Deduction Makes This Incentive Available to REITs.
Incentives are Available to All Applicants starting January 1, 2006 through 2007. There is No Limit for the Amount of Money Available for This Incentive.
Extenders may increase eligibility through 2010.
Applicability
Commercial Buildings Includes Public Buildings Such as Schools as Well as Rental Housing.
Rental housing must be within the scope of ASHRAE 90.1
Must be four stories or higher
Availability of the Deduction
One-Third of the Incentive is Available Separately for Each of the Main Building Systems: Envelope--$0.60HVAC--$0.60Lighting--$0.60
Interim Targets for Lighting Make These Available Almost Immediately.
How Do You Qualify?: Technologies I
Compliance is similar to energy codes such as the IECC or ASHRAE 90.1.
Technologies that are credited include: More efficient cooling and water heating equipment Better controls than required by code Reductions in losses from ducts and fans Better insulation and windows Reducing or eliminating simultaneous heating and
cooling More efficient luminaires, ballasts, and lamps, and
selection of more efficient light sources
How do you Qualify?: Technologies II
Flexibility for Credit Energy Savings from a Wide Variety of Technologies and Designs: Daylighting Commissioning CHP Renewables Semi-Conditioned Spaces Low-Pressure Duct Systems
How Do You Qualify?: Procedures
How Do You Qualify?/Who Benefits?Follow processes and procedures that are
familiar.
Third party inspectors are like California T24 consultants: a system that works.
Calculations are simple and standardized.
Tax deduction goes to the company that owns the construction – could be tenant for some systems.
Why the Deduction is Valuable
How Do You Qualify?/Who Benefits? (cont.)Efficient buildings typically pay back in 4
years or less – good economics even without incentive – but the presence of incentive makes it easier to procure efficient equipment and design services.
Low operating costs and a better building should allow tenants to pay higher net rents.
How the Deduction Benefits BOMA Members I
It provides extra financial assistance in meeting energy savings goals
It focuses vendors on the highest levels of efficiency
Getting owners, managers, and operators to agree that energy is important enough to provide budget for efficiency
How the Deduction Benefits BOMA Members II
Overcomes current barriers to energy efficiency: Lack of information or experience about why high-
performance buildings are better for the occupant, as well as saving money
BOMA is working to address this problem through the BOMA Energy Efficiency Program (BEEP). BEEP is an operational excellence program designed to educate CRE owners and managers about the financial and environmental benefits of improving energy efficiency. www.boma.org/aboutboma/beep
How the Deduction Benefits BOMA Members III
Overcomes current barriers to energy efficiency: Lack of professional expertise or equipment to meet
ambitious goals. BOMA’s Office Building Show will include a Green
Pavilion that will feature energy efficient products, services, and professional experts. The conference will also include a “Green” track for education, featuring courses that focus on best practices for energy efficiency, sustainability, and environmental stewardship.
Transforming Markets
Because of these barriers, fewer buildings are as energy efficient as they should be
The lack of demand for efficiency is reflected in the lack of markets for improvements
Transforming Markets II
Incentives create expectations up and down the supply chain that high levels of efficiency will be sold; therefore
More designers will be competing for how they can achieve advanced goals, and
More efficient equipment will be available and prices will be more competitive
Market Barriers: NRDC’s Experience I
We had to select architects and engineers who specialized in innovative energy efficiency solutions
Even then, we had to constantly advise them about design choices and review their decisions
While we could install most of what we wanted, some products were so hard to find that additional savings were forgone
Market Barriers: NRDC’s Experience II
These problems became less significant over time as markets adjusted to providing higher efficiency
This adjustment was most pronounced in places like California where utilities were already promoting energy efficiency
Question and Answer Session
Follow instructions to ask questions of David, Joe and Kyle
Guidance on Meeting Advanced Energy Targets
New Buildings Institute (NBI) provides valuable resource material: Advanced Buildings™ Suite:
Benchmark™ Benefits Guide Reference Guide
Advanced Lighting Guidelines
These documents describe processes for designing with energy efficiency as well as architectural and engineering choices
All documents are available for purchase at www.newbuildings.org.
US EPA ENERGY STAR®
ENERGY STAR offers guidelines for energy management and improving energy efficiency
Includes online national energy performance rating system to benchmark energy performance
Provides no-cost training programs geared toward commercial real estate professions
Also includes an online directory of product and service providers
US EPA’s Energy Star Program
Collaborating with BOMA to develop Energy Efficiency Program
An Energy Star Showcase will be featured alongside the Green Pavilion at BOMA’s Office Building Show
Enhancing Cost Effectiveness
Architectural team and engineering team can work together in the earliest designing stages to identify integrated efficiency strategies that save construction costs.
With integrated design, 50% savings can be achieved without any increase in first cost The design itself is more expensive, and the
building envelope may cost more, but the HVAC system can be smaller and often simpler, reducing costs even more.
Working Together
Consortium for Energy Efficiency (www.cee1.org) is working with private sector companies and trade associations to provide information on how to comply.
CBTD Coalition Focus
NEMA & the Natural Resources Defense Council successfully advocated and shepherded the provision through the legislative process
Implementation requires us to promptly get the regulatory rules right and to vigorously promote the provision
NEMA has brought together a broad stakeholder coalition representing building owners, designers, manufacturers, distributors, installation contractors, efficiency advocates, and government to work together to ensure success
Progress to Date
Coalition meetings held on 10/13 & 11/1/05 with organizations; another scheduled for 1/5/06
Press participation in 11/1 meeting 40 organizations represented Website devoted to the CBTD to be launched 12/15;
www.efficientbuildings.org Communications plan developed to serve as CBTD
clearinghouse Met with DOE on software and personnel certification,
recommendations to DOE 11/18 NEMA has prepared a tri-fold pocket guide to the
deduction, which is on the NEMA website, www.nema.org
Final Question and Answer Session
Follow instructions to ask questions of David, Joe and Kyle
Contact information:
David B. Goldstein, Ph.D.Natural Resources Defense Council (415) [email protected]
Joseph MikrutCapitol Tax Partners(202) [email protected]
Kyle PitsorNational Electrical Manufacturers Association (703) [email protected]*
*This is not a typo
MARK YOUR CALENDARS!
Want more information on this topic? Plan to attend BOMA International’s North American Commercial Real Estate Congress and The Office Building Show where we’ll have updates and additional education on the Energy Bill!
When: June 24-27Where: Dallas, TX
For more information visit: www.bomaconvention.org or call
202-326-6341.