Parts of Obama's 'Better Buildings' Plan Ready to Go

President Obama yesterday put forward a Better Buildings Initiative, an incentive program designed to stimulate spending on energy-efficient retrofits for commercial buildings. The initiative not only promotes efficiency but also aims to create jobs in the building and manufacturing industries hit hardest by the crash of the construction sector.

Despite the long-term economic benefits of energy efficiency, building owners often have trouble raising capital to make improvements. To solve this problem, while aiming to increase the efficiency of commercial buildings 20% by 2020, Obama’s initiative proposes loan guarantees and corporate tax credits, and aims to reward local and state governments for taking a leadership role in requiring better building performance. Business and political leaders and industry groups have praised the initiative, saying it will create green jobs in the design, construction, and manufacturing industries for years to come.

Although many items on the president’s list will require legislation, federal agencies can take preliminary steps using existing authority, says Lane Burt, director of technical policy at the U.S. Green Building Council (USGBC). A pilot program guaranteeing loans for building owners, for example, could “run through existing programs at the Department of Energy,” he told EBN. And while tax credits for green upgrades will need Congressional approval, Burt explained, existing tax incentives like the Commercial Building Tax Deduction (CBTD) could improve almost immediately. “The deduction was designed for energy-efficient new construction,” said Burt, so it can be difficult and confusing to claim the deduction for retrofits. But he said the Internal Revenue Service would soon clarify its guidance on how to use the CBTD for improvements, potentially helping more building owners deduct as much as $1.80/ft2 from their gross income on tax forms.

The proposed tax credits (which directly decrease a taxpayer’s final tax liability) are more lucrative incentives, said Burt, but improving the CBTD while Congress debates the tax credits will help.

While Burt would not speculate on the exact timing of legislative action on the Better Buildings Initiative, acknowledging that “getting across the finish line is not easy,” he did not think the initiative would be controversial: “Energy efficiency is pretty much universally agreed upon,” he said.

Paula Melton