President Obama has announced an ambitious new building retrofit initiative as part of a his push to “Win The Future.” The “Better Buildings Initiative” will calls for an overhaul of tax incentives for energy efficiency upgrades at commercial buildings, as well as new federal spending for a large-scale retrofit initiative. The plan will spur innovation by reforming tax and other incentives to retrofit, creating a new competitive grant program for states and localities that streamline their regulations to attract retrofit investment, and challenging the private sector to invest in building upgrades through a new “Better Buildings Challenge.”
The President’s Budget will propose to make American businesses more energy efficient through a series of new initiatives:
- New tax incentives for building efficiency: The President is calling on Congress to redesign the current tax deduction for commercial building upgrades (197D deduction), transforming the current deduction to a credit that is more generous and that will encourage building owners and real estate investment trusts (REITs) to retrofit their properties.
- More financing opportunities for commercial retrofits: Access to financing is an important barrier to increased retrofit investment in some market segments. To address these gaps, the Small Business Administration is working to encourage existing lenders to take advantage of recently increased loan size limits to promote new energy efficiency retrofit loans for small businesses. The President’s Budget will also propose a new pilot program through the Department of Energy to guarantee loans for energy efficiency upgrades at hospitals, schools and other commercial buildings.
- “Race to Green” for state and municipal governments that streamline regulations and attract private investment for retrofit projects: Much of the authority to alter codes, regulations, and performance standards relating to commercial energy efficiency lies in the jurisdiction of states and localities. The President’s Budget will propose new competitive grants to states and/or local governments that streamline standards, encouraging upgrades and attracting private sector investment.
- The Better Buildings Challenge: The President is challenging CEOs and University Presidents to make their organizations leaders in saving energy, which will save them money and improve productivity. Partners will commit to a series of actions to make their facilities more efficient. They will in turn become eligible for benefits including public recognition, technical assistance, and best-practices sharing through a network of peers.
- Training the next generation of commercial building technology workers: Using existing authorities, the Administration is currently working to implement a number of reforms, including improving transparency around energy efficiency performance, launching a Building Construction Technology Extension Partnership modeled on the successful Manufacturing Extension Partnership at Commerce, and providing more workforce training in areas such as energy auditing and building operations.
Senator Jeff Bingaman (D-N.M.) is also reportedly working on separate legislation that would encourage commercial building retrofits.
