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Statement of American Institute of Architects
The American Institute of
Architects, the voice of the architectural profession and the resource to its
80,000 members in service to society, strongly supports governmental policies,
programs, and incentives that encourage energy conservation - especially as they
relate to the built environment. We applaud the efforts of Chairman Neal and the
members of the subcommittee for holding this important hearing on how tax
incentives can increase the development of alternative energy technologies and
improve energy efficiency.
In order to significantly improve
energy efficiency in the United States, we must make a serious commitment to designing
and constructing more energy efficient buildings. The building sector is one of
the largest consumers of energy in our nation and is responsible for a massive share
of the electricity used. One way to spur the development of energy efficient
buildings, and thus reducing the amount of energy the building sector consumes,
is through tax incentives. Specifically, extending and enlarging the Energy
Efficient Commercial Buildings Tax Deduction (Public Law 109-58, §1331) will
provide the necessary incentives to spur the design and construction of more
energy efficient buildings in the United States.
According to the Department of
Energy’s Energy Information Administration, the building sector accounts for 39
percent of total U.S. energy consumption, more than both the transportation and
industry sectors.[1]
The same report found that buildings are responsible for 71 percent of U.S. electricity consumption. Therefore, if we in the United States want to be serious
about energy efficiency, buildings must become a significant part of the
discussion.
Over the next 30
years, the character of the built environment will change dramatically.
Currently, U.S. building stock sits at 300 billion square feet. Experts
predict that between now and 2035, 52 billion square feet will be demolished,
150 billion square feet will be remodeled, and another 150 billion square feet
will be newly constructed.[2]
Because buildings are such a major consumer of energy, the AIA believes
that if Congress and our nation want to significantly improve energy efficiency,
addressing energy consumption in the next generation of buildings is a vital
endeavor. Providing incentives for designing and constructing energy efficient
buildings and for installing energy efficient systems in them is an effective
way for the federal government to promote a sustainable future.
Federal tax incentives designed to
spur the construction of energy efficient buildings are currently in place, but
in order for these incentives to be utilized to their potential, some changes
are needed. Specifically, within the Energy Policy Act of 2005 (Public Law
109-58), Congress approved a provision that created a tax deduction for the
design and construction of commercial buildings that meet a high standard of
energy efficiency.
Known as the Energy Efficient
Commercial Buildings Tax Deduction, this incentive allows building owners to claim a tax deduction of up to $1.80 per
square foot of building area for the installation of systems that reduce the
total energy and power costs by 50 percent or more when compared to a specific
industry standard for energy efficiency (ASHRAE 90.1). The building systems
eligible to secure the tax deduction include interior lighting systems; heating,
cooling, ventilation, and hot water systems; and building envelope systems.
Some energy efficient systems are more expensive to design, build, and install
than their traditional counterparts. Thus the initial increased capital costs
often dissuade owners from installing these systems. The Energy Efficient
Commercial Buildings Tax Deduction addresses this situation and provides
building owners with the financial incentive to build in an energy efficient
manner.
The AIA
strongly supported the enactment of this tax deduction; however in order to ensure
that it can continue to be used to encourage the construction of energy
efficient buildings, the deduction must be extended and enlarged. The current
deduction can only be claimed for buildings placed into service by December 31, 2008. As it often takes years to move from the building’s initial design
stage to final completion, many buildings on drawing boards today will not be
placed into service until long after the deduction has expired and therefore are
unable to reap the intended tax benefit for installing energy efficient
systems. Therefore, the AIA encourages Congress to extend the Energy
Efficient Commercial Buildings Tax Deduction for a sufficiently long and
predictable period to allow designers of future structures to factor it into
their financial calculus.
Legislation
has been introduced in both the House and the Senate that will extend the
Energy Efficient Commercial Buildings Tax Deduction. H.R. 539, The Buildings
for the 21st Century Act, will extend the tax deduction until 2013.
This bill, introduced by Rep. Allyson Schwartz, has attracted 136 bi-partisan
cosponsors and if adopted, would ensure that any buildings that meet the
efficiency requirements under the deduction and are placed into service by 2013
will be able to claim the deduction. In an effort to further increase the
deduction’s effectiveness, H.R. 539 increases the deduction from the current
$1.80 per square foot to $2.25 per square foot. The AIA strongly supports this
bill because exceeding ASHRAE 90.1 by 50% is a significant leap in energy
efficiency and, in most cases, will require capital expenditures in excess of
$1.80 per square foot to reach it.
We
applaud the Subcommittee for addressing this issue and urge it to extend and
deepen the Energy Efficient Commercial Buildings Tax Deduction.
[1]
http://buildingsdatabook.eere.energy.gov/docs/1.1.3.pdf
[2] http://www.architecture2030.com
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