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Energy Efficiency: 2012 Bipartisan Issue
Most policy insiders are writing off the prospects of Congress being able to move meaningful energy legislation in 2012. Between partisan gridlock and the frenzy of the presidential campaign, experts are saying that chances are nil that this Congress can pass an energy bill of any significance.
I have a contrarian view. It’s true that a comprehensive energy package probably won’t become law this year. But legislation that creates jobs by championing grassroots energy efficiency without worsening the federal deficit has a decent chance to pass both chambers in 2012. Congress is also likely to extend – and hopefully expand – a range of tax credits that give home- and building owners the financial incentive to invest in greater amounts of insulation and other measures that save energy and cut back on utility bills.
The energy efficiency vehicle that has the best chance to gain momentum this year is the SAVE (Sensible Accounting to Value Energy) Act. Why? It not only has strong bipartisan backing on the Hill but has attracted support from a wide-ranging coalition, including such strange bedfellows as the U.S. Chamber of Commerce, the American Gas Association, the National Association of Manufacturers, and the Leading Builders of America, along with the Natural Resources Defense Council, the U.S. Green Building Council, and the Center for American Progress, among others. These disparate groups recognize that the SAVE Act would generate immediate economic benefits, spurring job growth in sectors that sorely need it.
How? The SAVE Act would correct "blind spots" in federal mortgage underwriting and home appraisals that don’t accurately reflect true energy costs. Unveiled last fall by Senators Michael Bennet (D-CO) and Johnny Isakson (R-GA), the SAVE Act would stimulate greater investment in energy efficiency by making homeowners appreciate just how much money they could save.
The SAVE Act’s economic impact is nothing to ignore. Enacting it would, according to a study from The American Council for an Energy-Efficient Economy, create some 83,000 new jobs in construction, renovation and manufacturing over the next decade.
Another bipartisan energy efficiency initiative that would be a powerful antidote to our ailing economy without exacerbating the federal deficit is the Property-Assessed Clean Energy (PACE ) Assessment Protection Act. Sponsored by Representatives Nan Hayworth (R-NY), Dan Lungren (R-CA), and Mike Thompson (D-CA), the bill is aimed at restoring the PACE program’s promise by bringing together small businesses and local governments to ensure accurate residential property assessments. A revived PACE would also spur greater residential investment in energy efficiency. One study suggests that if just one percent of America’s homes were retrofitted through PACE, some 226,000 jobs would be created across the country, generating $42 billion in economic activity.
One of the most important tools the federal government has for encouraging energy efficiency in homes and commercial structures is the tax code. Since 2005, incentives have driven efforts to improve both the energy efficiency of new homes through a provision known as 45L, as well as the energy retrofitting of existing homes – through a provision known as 25C. These credits have driven significant energy efficiency gains in American homes. Unfortunately, both provisions expired at the end of 2011 and are part of a package of provisions known collectively as “tax extenders” that are awaiting extension. Like other tax credits, 25C and 45L can be extended retroactively to fill the gap, but long gaps discourage builders and home owners from taking energy efficiency as seriously as they need to. Hopefully, 25C and 45L can be extended as soon as possible.
A similar provision – a tax deduction known as 179D – is aimed at buttressing energy efficiency in commercial buildings. It’s in place through 2012, but the complexity of certain provisions has discouraged property owners from taking full advantage. Last year, President Obama endorsed measures to simplify 179D and make it more effective. These reforms have been met with bipartisan support on Capitol Hill, but have not become law. Hopefully, by February Congress can agree to implement common sense reforms in 179D and extend it to ensure that energy efficiency improves in commercial buildings.
Creating greater incentives for energy efficiency is the one area of energy policy likely to gain traction on Capitol Hill this year. It’s the real bipartisan legislative ticket for 2012.
By Kate Offringa
CEO, Council of the North American Insulation Manufacturers Association
Council of the North American Insulation Manufacturers Association
The Council of the North American Insulation Manufacturers Association advocates for policies and programs that mandate, encourage, and incentivize increased energy efficiency through insulation in new and existing residential and commercial buildings and industrial applications. Membership in the Council of NAIMA is open to thermal and acoustical insulation manufacturers – regardless of insulation product type – and their suppliers located in North America.