Senate hearings this week indicate that clean energy financing and tax policies considered in the current Congress might significantly affect commercial real estate. (Tax Notes, April 29)
Senate Finance Focus
- Senate Finance Committee Chairman Ron Wyden (D-OR), photo above, opened an April 27 hearing by noting how President Biden’s goal of cutting carbon emissions in half by 2030 is driving clean energy policy. Wyden stated, "The reality is, a debate on energy and transportation is largely a debate on tax policy. That puts this committee in the driver’s seat when it comes to job-creating legislation that addresses head-on the existential challenge of the climate crisis."
- Sen Wyden also remarked about legislation he introduced last week – the Clean Energy for America Act, which would revamp tax incentives directed at buildings, electricity and transportation. Among other things, the bill would reform the 179D deduction for energy efficient commercial and multifamily buildings – with the value of the incentive increasing as more energy is conserved. (Text of the legislation, one-page summary of the bill and a section-by-section summary.)
- Committee Ranking Member Sen. Mike Crapo during his opening remarks noted draft legislation that he unveiled the day before with committee member Sheldon Whitehouse (D-RI) – the Energy Sector Innovation Credit (ESIC) Act. ESIC is an incentive that would “target tax credits for innovative clean energy technologies,” Crapo said. (SFC news release).
E-QUIP Accelerated Depreciation
- Separately, a broad coalition of environmental, manufacturing, and real estate groups led by The Roundtable supports the E-QUIP Act (H.R. 2346), which proposes “accelerated depreciation” for high-performance equipment installed in commercial and multifamily buildings. The coalition is urging policymakers to include this measure as part of any “green tax” package that may be folded into larger infrastructure spending legislation. (Roundtable Weekly, April 2)
- Roundtable President and CEO Jeffrey DeBoer emphasized an important distinction between the energy incentives affecting CRE. “All building owners are intensely focused on operations and technologies to reduce energy consumption. Yet the policy discussions in Washington frequently don’t reflect the reality of these efforts to make commercial real estate properties more sustainable. It is retrofitting the existing building stock, not new construction, where energy savings and policy incentives are most challenging.” DeBoer said.
- He added, “The 179D incentive fails to reflect the diverse vintage and tenant base in buildings. The E-QUIP incentive accommodates existing buildings by targeting the addition of high-performance, energy saving components. Combining the two incentives would make most sense.”
National Climate Bank
- The Senate Environment and Public Works Climate Subcommittee on April 27 held a “Legislative Hearing on S.283, National Climate Bank Act” focused on how a national climate bank, also known as an “energy accelerator,” would invest in renewable energy technology.
- Sen. Chris Van Hollen (D-MD), photo above, co-author of S. 283 with Subcommittee Chairman Sen. Ed Markey (D-MA), testified at the hearing, “… we need a National Clean Energy Accelerator … so we can turbocharge private investment, fortify our energy grid, and create millions of clean energy jobs – including in those communities where fossil fuel plants have closed.”
- Van Hollen’s legislation is supported conceptually by President Biden’s American Jobs Plan, which recommends a $27 billion “accelerator” financing platform to mobilize private investment into building retrofits and other clean energy projects.
- White House National Economic Council Director Brian Deese recently discussed the creation of a climate bank in an interview with Roundtable President and CEO, Jeffrey DeBoer for The Roundtable's April 20 Spring Meeting. (Roundtable Weekly, April 23).
Additionally, the White House on April 27 announced policy actions to advance the expansion and modernization of the energy grid. National Climate Advisor Gina McCarthy noted, "After the Texas transmission debacle this winter, no one can doubt the need to invest in our electric grid. The steps that the Departments of Energy and Transportation are taking today, when combined with the grid investments outlined in the American Jobs Plan, will turbocharge the building of major new electricity transmission lines that will generate new jobs and power our economy for years to come."
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