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The New Energy Bill: Tax Deductions for Energy Efficient Construction and Renovation


The New Energy Bill: Tax Deductions for Energy Efficient Construction and Renovation December 7, 2005 Audio Seminar Featuring David Goldstein Energy Program Director ... – PowerPoint PPT presentation

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Title: The New Energy Bill: Tax Deductions for Energy Efficient Construction and Renovation

The New Energy Bill Tax Deductions for Energy
Efficient Construction and Renovation
  • December 7, 2005
  • Audio Seminar

  • David Goldstein
  • Energy Program Director
  • Natural Resources Defense Council
  • Joseph Mikrut
  • Partner
  • Capitol Tax Partners, LLC
  • Kyle Pitsor
  • Vice 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.

  • Commercial Buildings Includes Public Buildings
    Such as Schools as Well as Rental Housing.
  • Rental housing must be within the scope of ASHRAE
  • 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--0.60
  • HVAC--0.60
  • Lighting--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
  • Better controls than required by code
  • Reductions in losses from ducts and fans
  • Better insulation and windows
  • Reducing or eliminating simultaneous heating and
  • 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
  • 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
  • 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.

How the Deduction Benefits BOMA Members III
  • Overcomes current barriers to energy efficiency
  • Lack of professional expertise or equipment to
    meet ambitious goals.
  • BOMAs 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 NRDCs Experience I
  • We had to select architects and engineers who
    specialized in innovative energy efficiency
  • 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 NRDCs Experience II
  • These problems became less significant over time
    as markets adjusted to providing higher
  • 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

  • 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 EPAs Energy Star Program
  • Collaborating with BOMA to develop Energy
    Efficiency Program
  • An Energy Star Showcase will be featured
    alongside the Green Pavilion at BOMAs 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 (
    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
  • Communications plan developed to serve as CBTD
  • 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,

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) 875-6177
  • Joseph Mikrut
  • Capitol Tax Partners
  • (202) 289-8700
  • Kyle Pitsor
  • National Electrical Manufacturers Association
  • (703) 841-3274
  • This is not a typo

  • Want more information on this topic? Plan to
    attend BOMA Internationals North American
    Commercial Real Estate Congress and The Office
    Building Show where well have updates and
    additional education on the Energy Bill!
  • When June 24-27
  • Where Dallas, TX
  • For more information visit www.bomaconvention.
    org or call
  • 202-326-6341.