
By Meg Waltner
The clock is ticking for four important energy efficiency tax incentives for home and business property owners and manufacturers that are set to expire at the end of this month.
Energy efficiency is the cleanest, cheapest resource we have to cut our nation’s energy bills, while creating jobs throughout the economy and reducing emissions for years to come, making it truly the gift that keeps giving. But there are some grinches in Congress poised to allow the demise of tax incentives that play an important role in accelerating the availability of energy-saving products and practices by encouraging homeowners and businesses to invest in high-performing buildings, equipment, lighting, and appliances.
Also at stake are critical incentives for clean energy, which my colleagues Kit Kennedy and Pierre Bull detailed yesterday. These renewable energy incentives—crucial for the continued expansion of clean onshore wind power and investment in offshore wind—are also set to expire at year’s end.
Adding insult to injury, while these clean energy provisions that save money and cut pollution will disappear, the 100-year-old suite of fossil fuel giveaways will keep lining the pockets of Big Oil while pumping carbon and other dangerous pollution into the air.
In contrast, ACEEE estimates that the energy efficiency incentives alone, if extended and enhanced, could add $8.3 billion to the nation’s gross domestic product through 2030 and create hundreds of thousands of jobs, while averting 16.4 quads of fuel use (about equal to 16 percent of total US energy use in one year) and 3.2 million gigawatt hours of electricity (for comparison, total electricity sales in 2011 were 3.7 million gigawatt hours) cumulatively over 15 years.
The expiring energy efficiency incentives are:
- The deduction for commercial building owners who improve their building’s efficiency by 50 percent compared to a code baseline (Section 179D)
- The credit to builders who reduce energy use in new homes by roughly 30 percent compared to a 2006 code-built home (Section 45L)
- The credit to manufacturers of super high efficiency dishwashers, refrigerators, and clothes washers (Section 45M); and
- The credit to homeowners who invest in energy efficiency improvements that meet certain efficiency criteria, such as a new high efficiency air conditioner or new windows (Section25c).
Why the Incentives Are Needed
Although energy efficiency is beneficial to both consumers and businesses as it saves them money on their energy bills, people often don’t invest in more efficient products even though any additional upfront costs quickly pay back in utility savings. The reasons vary, but can include lack of upfront capital, insufficient information on potential energy savings, unavailable products, or because the person making the purchasing decision isn’t the one who benefits from the energy saving (such as a landlord buying an air conditioner when the tenant pays the electricity bills).
The government has a role to play to encourage investment in energy efficiency for multiple reasons, including:
- Energy efficiency creates jobs. For example, manufacturers hire workers to make the more efficient products, which lead to energy savings that consumers and businesses can spend on other goods and services that generally provide more jobs per dollar spent than electricity production.
- Efficiency reduces our nation’s electricity use, which means less coal is burned and less pollution emitted that exacerbates asthma and other health problems. Dirty power generation also contributes to global warming, increasing the risks of extreme storms, drought, food shortages, and other problems.
- Reduced electricity use also means less strain on our transmission grid, leading to fewer power outages, which can be deadly for the sick and elderly.
As explained in detail in NRDC’s new Issue Brief, tax incentives play an important role in transforming the market for high-performing products. For instance, when the tax credit for new energy efficient homes (45L) was enacted in 2005, almost no houses on the market met the criteria of a roughly 30 percent improvement. After a few years of a $2,000 incentive for each home that met the efficiency target, the market share climbed to 10 percent. This is impressive on its own, but the reach of the incentive has actually been much further. To comply with the credit, builders must rate their home with the Home Energy Rating System (HERS). This helped familiarize builders with the HERS system, which combined with other factors, has resulted in its use with a whopping 40 percent of the new homes market. Most recently, the newly updated 2015 national model energy code will allow builders for the first time to comply with it using a HERS rating—and the code requires much higher efficiency levels than the original version of 45L. While the tax incentive can’t take all the credit, this likely would not have happened without it and is an example of how all of these policies work together to transform the market and at a very low cost to the federal government.
While the new homes credit has arguably been the most successful of the four tax incentives, all of the performance-based incentives have helped shift markets towards greater efficiency products. While in a perfect world, we would have the opportunity to modify and enhance the incentives–upping stringency levels, making sure they all pay for performance, and restructuring them to increase utilization—the important thing now is to extend them so as not to cut off this source of support for energy efficiency. These incentives have been incredibly effective overall at making our homes and workplaces more efficient, reducing energy bills, cutting pollution and creating jobs throughout the economy.
Congress should act swiftly to extend them. If it doesn’t, we’ll see clean energy suffer while Big Oil keeps polluting and pocketing billions in taxpayer dollars. Now, no one is quite certain why anyone would support that kind of outcome—perhaps, like the Grinch, their hearts are two sizes two small.
This piece originally appeared on the NRDC's Switchboard blog.
Visit EcoWatch’s GREEN BUILDING page for more related news on this topic.
Butterflies across the U.S. West are disappearing, and now researchers say the climate crisis is largely to blame.
- New Clues Help Monarch Butterfly Conservation Efforts - EcoWatch ›
- Monarch Butterflies Will Be Protected Under Historic Deal - EcoWatch ›
EcoWatch Daily Newsletter
California faces another "critically dry year" according to state officials, and a destructive wildfire season looms on its horizon. But in a state that welcomes innovation, water efficacy approaches and drought management could replenish California, increasingly threatened by the climate's new extremes.
- Remarkable Drop in Colorado River Water Use Sign of Climate ... ›
- California Faces a Future of Extreme Weather - EcoWatch ›
Trending
Wisdom the mōlī, or Laysan albatross, is the oldest wild bird known to science at the age of at least 70. She is also, as of February 1, a new mother.
<div id="dadb2" class="rm-shortcode" data-rm-shortcode-id="aa2ad8cb566c9b4b6d2df2693669f6f9"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1357796504740761602" data-partner="rebelmouse"><div style="margin:1em 0">🚨Cute baby alert! Wisdom's chick has hatched!!! 🐣😍 Wisdom, a mōlī (Laysan albatross) and world’s oldest known, ban… https://t.co/Nco050ztBA</div> — USFWS Pacific Region (@USFWS Pacific Region)<a href="https://twitter.com/USFWSPacific/statuses/1357796504740761602">1612558888.0</a></blockquote></div>
The Science Behind Frozen Wind Turbines – and How to Keep Them Spinning Through the Winter
By Hui Hu
Winter is supposed to be the best season for wind power – the winds are stronger, and since air density increases as the temperature drops, more force is pushing on the blades. But winter also comes with a problem: freezing weather.
Comparing rime ice and glaze ice shows how each changes the texture of the blade. Gao, Liu and Hu, 2021, CC BY-ND
Ice buildup changes air flow around the turbine blade, which can slow it down. The top photos show ice forming after 10 minutes at different temperatures in the Wind Research Tunnel. The lower measurements show airflow separation as ice accumulates. Icing Research Tunnel of Iowa State University, CC BY-ND
How ice builds up on the tips of turbine blades. Gao, Liu and Hu, 2021, CC BY-ND
While traditional investment in the ocean technology sector has been tentative, growth in Israeli maritime innovations has been exponential in the last few years, and environmental concern has come to the forefront.
theDOCK aims to innovate the Israeli maritime sector. Pexels
<p>The UN hopes that new investments in ocean science and technology will help turn the tide for the oceans. As such, this year kicked off the <a href="https://www.oceandecade.org/" target="_blank" rel="noopener noreferrer">United Nations Decade of Ocean Science for Sustainable Development (2021-2030)</a> to galvanize massive support for the blue economy.</p><p>According to the World Bank, the blue economy is the "sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem," <a href="https://www.sciencedirect.com/science/article/pii/S0160412019338255#b0245" target="_blank" rel="noopener noreferrer">Science Direct</a> reported. It represents this new sector for investments and innovations that work in tandem with the oceans rather than in exploitation of them.</p><p>As recently as Aug. 2020, <a href="https://www.reutersevents.com/sustainability/esg-investors-slow-make-waves-25tn-ocean-economy" target="_blank" rel="noopener noreferrer">Reuters</a> noted that ESG Investors, those looking to invest in opportunities that have a positive impact in environmental, social and governance (ESG) issues, have been interested in "blue finance" but slow to invest.</p><p>"It is a hugely under-invested economic opportunity that is crucial to the way we have to address living on one planet," Simon Dent, director of blue investments at Mirova Natural Capital, told Reuters.</p><p>Even with slow investment, the blue economy is still expected to expand at twice the rate of the mainstream economy by 2030, Reuters reported. It already contributes $2.5tn a year in economic output, the report noted.</p><p>Current, upward <a href="https://www.ecowatch.com/-innovation-blue-economy-2646147405.html" target="_self">shifts in blue economy investments are being driven by innovation</a>, a trend the UN hopes will continue globally for the benefit of all oceans and people.</p><p>In Israel, this push has successfully translated into investment in and innovation of global ports, shipping, logistics and offshore sectors. The "Startup Nation," as Israel is often called, has seen its maritime tech ecosystem grow "significantly" in recent years and expects that growth to "accelerate dramatically," <a href="https://itrade.gov.il/belgium-english/how-israel-is-becoming-a-port-of-call-for-maritime-innovation/" target="_blank" rel="noopener noreferrer">iTrade</a> reported.</p><p>Driving this wave of momentum has been rising Israeli venture capital hub <a href="https://www.thedockinnovation.com/" target="_blank" rel="noopener noreferrer">theDOCK</a>. Founded by Israeli Navy veterans in 2017, theDOCK works with early-stage companies in the maritime space to bring their solutions to market. The hub's pioneering efforts ignited Israel's maritime technology sector, and now, with their new fund, theDOCK is motivating these high-tech solutions to also address ESG criteria.</p><p>"While ESG has always been on theDOCK's agenda, this theme has become even more of a priority," Nir Gartzman, theDOCK's managing partner, told EcoWatch. "80 percent of the startups in our portfolio (for theDOCK's Navigator II fund) will have a primary or secondary contribution to environmental, social and governance (ESG) criteria."</p><p>In a company presentation, theDOCK called contribution to the ESG agenda a "hot discussion topic" for traditional players in the space and their boards, many of whom are looking to adopt new technologies with a positive impact on the planet. The focus is on reducing carbon emissions and protecting the environment, the presentation outlines. As such, theDOCK also explicitly screens candidate investments by ESG criteria as well.</p><p>Within the maritime space, environmental innovations could include measures like increased fuel and energy efficiency, better monitoring of potential pollution sources, improved waste and air emissions management and processing of marine debris/trash into reusable materials, theDOCK's presentation noted.</p>theDOCK team includes (left to right) Michal Hendel-Sufa, Head of Alliances, Noa Schuman, CMO, Nir Gartzman, Co-Founder & Managing Partner, and Hannan Carmeli, Co-Founder & Managing Partner. Dudu Koren
<p>theDOCK's own portfolio includes companies like Orca AI, which uses an intelligent collision avoidance system to reduce the probability of oil or fuel spills, AiDock, which eliminates the use of paper by automating the customs clearance process, and DockTech, which uses depth "crowdsourcing" data to map riverbeds in real-time and optimize cargo loading, thereby reducing trips and fuel usage while also avoiding groundings.</p><p>"Oceans are a big opportunity primarily because they are just that – big!" theDOCK's Chief Marketing Officer Noa Schuman summarized. "As such, the magnitude of their criticality to the global ecosystem, the magnitude of pollution risk and the steps needed to overcome those challenges – are all huge."</p><p>There is hope that this wave of interest and investment in environmentally-positive maritime technologies will accelerate the blue economy and ESG investing even further, in Israel and beyond.</p>- 14 Countries Commit to Ocean Sustainability Initiative - EcoWatch ›
- These 11 Innovations Are Protecting Ocean Life - EcoWatch ›
- How Innovation Is Driving the Blue Economy - EcoWatch ›