Transcript DSM and Energy Efficient Buildings in China, the U.S. and

The New Energy Bill: Tax Deductions for
Energy Efficient Construction and Renovation
December 7, 2005
Audio Seminar
Featuring
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.
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--$0.60
 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:





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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:

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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 highperformance 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:

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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

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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) 875-6177
[email protected]

Joseph Mikrut
Capitol Tax Partners
(202) 289-8700
[email protected]

Kyle Pitsor
National Electrical Manufacturers Association
(703) 841-3274
[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 24-27
Where: Dallas, TX
For more information visit:
www.bomaconvention.org or call
202-326-6341.