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10/09/2008 08:16 AM     print story email story  

Federal Tax Deduction Established For Energy Efficient Buildings News

Last Friday, when President Bush signed into law the financial bailout package and extensions of tax credits for the renewable energy industry, he also set into motion the Energy Efficiency Commercial Building Tax Deduction--one of the many tax initiatives added in the 11th hour by the Senate. 

The measure establishes a tax deduction of up to $1.80 per square foot for owners or tenants (or designers, in the case of government-owned buildings) of new or existing commercial buildings that are constructed or reconstructed to save at least 50% of the heating, cooling, ventilation, water heating, and interior lighting energy cost of a building.

Only buildings covered by the scope of ASHRAE Standard 90.1-2001 are eligible.

Partial deductions of $.60 per square foot can be taken for improvements to one of three building systems--the building envelope, lighting, or heating and cooling system--that reduces total heating, cooling, ventilation, water heating and interior lighting energy use by 16 2/3% (16 2/3% is the 50% goal for the three systems spread equally over the three systems).

The provision is effective for property placed in service after December 31, 2005, and prior to December 31, 2013.

In Related News...

Last month the International Energy Conservation Code (IECC) decided not to adopt the "30% Solution" sought by the U.S. Department of Energy, the U.S. Conference of Mayors, the National Association of State Energy Officials, many governors and the broad-based Energy Efficient Codes Coalition (EECC).

“We’re deeply disappointed that ‘The 30% Solution’--our comprehensive proposal to meet the 30% goal--fell just a few votes shy of the two-thirds needed for adoption,” said EECC Director William Fay. “But we are heartened that over 60% of those participating voted in favor of our package, and that a majority of code and other governmental officials consistently backed individual proposals representing an unprecedented increase in new home energy efficiency.

Principal opponents argued that now isn’t the time to adopt “The 30% Solution,” which they said is too costly to homeowners, technologically unachievable and burdensome to code officials.

But, as one homebuilder pointed out, green homebuilders, prove every day that 30% is a modest target, and that many builders around the nation are achieving efficiency improvements well beyond 30%. As to the cost of energy efficiency to homeowners, low income housing advocates testified that inability to pay utility bills is the second leading cause of foreclosures and evictions, which are currently at record highs.

Finally, a study by U.S. DOE’s National Renewable Energy Laboratory found that a 30% more energy-efficient home returns $511 a year in energy savings to homeowners after consideration of the cost of improvements.

“It’s ironic that the very day opponents called ‘The 30% Solution’ too costly, oil prices jumped $25 a barrel,” Fay said. “For those who say ‘Not now,’ we ask ‘When?’”

The Benefits of ICC Actions

The 2009 IECC will have several significant new provisions to boost energy efficiency, including:

  • Increased insulation in basements, floors and walls;
  • Improved window efficiency;
  • Reductions in wasted energy from leaky heating & cooling ducts;
  • Reductions in tradeoffs that fail to capture energy savings from efficient heating & cooling equipment;
  • High-efficiency lighting; and
  • Improved air sealing within the building envelope.


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