Reid Detchon, executive director of the Energy Future Coalition, along with many others, applauded US Senators Jeff Bingaman (D-NM), Olympia Snowe (R-ME), Benjamin Cardin (D-MD), and Dianne Feinstein (D-CA) for their leadership in introducing S.3591, the “Commercial Building Modernization Act,” a bill that would extend and strengthen the existing 179D commercial building tax deduction for energy efficiency improvements in commercial buildings.
Almost 20% of energy used in the US is used by commercial buildings. These forward-thinking senators have recognized the need to make improvements to the energy infrastructure of commercial buildings, especially when considering most commercial buildings stay in operation for more than 20 years.
US senators first introduced a series of tax deductions to get commercial building managers interested in upgrading or retrofitting their lighting systems this early attempt was referred to as Energy Efficient Commercial Buildings Tax Deduction, which surprisingly enough did not take off the way senators had hoped. Some of its features were 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).
In addition, 179D also 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.
The New Bill:
This new legislation strengthens the old bill and makes benefits available through the end of 2016, it also allows building owners to allocate the benefits to third-party businesses.
Ironically enough, the primary benefit of the Commercial Building Modernization act is still a deduction. 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. The way the deduction works now is to pay up to 60 percent of the retrofit, up front. The remaining 40 percent is then disbursed upon verification of the performance of the completed upgrades.
The Real Estate Roundtable, Natural Resources Defense Council (NRDC) and US Green Building Council (USGBC) project thousands of new manufacturing and construction jobs to be created by the passing of this act. This is great news for manufacturers and people looking to get back to work in America. 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.
Danielle Stewart is a media consultant for [P2] Precision Paragon.