BBI, Revision to Commercial Building Tax Deduction
to Help Industry
December 8, 2011
By Sahely Mukerji, firstname.lastname@example.org
Serious Energy of Sunnyvale, Calif., and Alcoa of Pittsburgh, among
others, joined the Better Building Initiative (BBI) on December
2, the same day that President Obama announced
nearly $4 billion in public and private investments in energy upgrades
as part of the BBI.
The president also announced the same day that the Treasury is
revisiting its guidance to section 179D of the Internal Revenue
Code that provides a deduction
for the cost of qualifying energy-efficient commercial building
"The Better Buildings Initiative is a new drive from the White
House and Department of Energy (DOE) to reduce reasons not to upgrade
buildings for energy efficiency," says Kevin Surace, CEO of
Serious Energy. "First cost is the largest reason owners don't
upgrade. Those committed to the program are delivering solutions
which address first cost and drive payback periods down to where
it would be hard to not upgrade your building."
In joining the BBI, Alcoa is implementing an enterprise-wide energy
reduction initiative to decrease energy use in its Global Primary
Products division by 10 percent and its other businesses by 20 percent
"Last year, the buildings in which we work and live used
roughly 40 percent of the energy in the U.S. economy at a cost of
over $400 billion," says Glen Morrison, president of Alcoa
Building and Construction Systems. "Through a variety of efficiency
improvements we can make these buildings more energy efficient,
while creating jobs and building a stronger economy."
One of those "efficiency improvements" would be the guidance
revision to section 179D. In the coming weeks, the Treasury will
issue new guidance to modify the existing targets for claiming the
partial deduction. The Treasury, in consultation with the DOE, also
will continue to work on streamlining the requirements for claiming
a deduction, including a simplified approach for modeling common
energy upgrade measures, which would reduce modeling requirement
costs for building owners.
Revision and simplification of the commercial building tax deduction
has been long overdue says Sneh Kumar, manager of DOE Projects at
Traco in Cranberry Township, Pa. "It would help the commercial
building industry and provide added incentive for the building owners
to upgrade their buildings," he says. "Current claim process
requires building owners to do whole building energy analysis to
be able to claim the tax deductions, except in case of lighting
upgrades, which has a simplified (prescriptive) method of claiming
deductions. Building envelope, HVAC, etc., do not have a simplified
approach for claim calculation."
As whole building energy analysis is expensive, not many building
owners have been able to take advantage of this tax deduction, Kumar
says. "In addition, when someone is upgrading only a certain
building system, for example, lighting or façade or HVAC,
it is too cumbersome and does not justify the additional cost to
do whole building energy analysis.
"I did not see any timeline for the revision though I hope
the Internal Revenue Service and DOE are able to come up with the
simplification soon," Kumar says. "There are still two
years left before this tax deduction expires."
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