Guest Post: Energy Efficiency Bill Gets An Upgrade

U.S. senators passed a new bill this month called S.3591, the “Commercial Building Modernization Act,” that extends and strengthens the existing 179D commercial building tax deduction for energy efficiency improvements in commercial buildings.

The senators involved in getting this legislation passed are a bi-partisan group namely Jeff Bingaman (D-NM), Olympia Snowe (R-ME), Benjamin Cardin (D-MD), and Dianne Feinstein (D-CA).

The senators made it clear that commercial buildings need to make 21st century improvements to lighting infrastructure considering some of them are operational for more than 20 years and account for almost 20% of all the energy used in the U.S.

First attempts – 179D Commercial Building Tax Deduction:

The first draft of this legislation was introduced solely as a tax deduction to get commercial building managers to complete an energy-saving retrofit of their lighting applications. This early attempt was not taken advantage of way senators had hoped. Features of 179D included allowances for a federal tax deduction of up to $1.80 per square foot for new buildings and retrofitting old buildings with energy-saving equipment or materials. The only caveat was that the energy used by the building must be 50 percent less than the guidelines established in the 2001 code of the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE). Also 179D allowed for a partial deduction of up to $0.60 per square foot for individual system improvements, such as improvements for commercial lighting, windows or HVAC.

New Legislation:

The new bill allows building managers ample time to take advantage of its features as it remains active till 2016. It strengthens the old legislation by keeping deductions intact as well as allowing building managers to allocate the benefits to third-party businesses.

The new format is better for managers because it will pay for 60% of costs of retrofitting upfront. The remaining 40 percent is then disbursed upon verification of the performance of the completed upgrades. The deductions range from $1.00 per square foot for energy savings of at least 20 percent to $4.00 per square foot for energy savings of 50 percent or more.

Why It’s Good:

The Real Estate Roundtable, Natural Resources Defense Council (NRDC) and U.S. Green Building Council (USGBC) projects thousands of new manufacturing and construction jobs to be created thanks to this act passing. Manufacturers and workers alike can be happy about that!
The USGBC, Roundtable and NRDC says this act will generate more than 77,000 construction, manufacturing and service jobs throughout the country—while achieving greater national energy security and independence.

By Danielle Stewart

Photo: U.S. Capitol from Shutterstock

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