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The Coalition for Energy Efficient Jobs & Investment is comprised of a broad-based group of organizations and companies that represent a wide spectrum of the U.S. economy. They include real estate, manufacturing, architecture, contracting, engineering, building services, financing, labor, education, environmental and energy efficiency advocates. Together, we represent many diverse businesses that drive and sustain American job growth.
With the assistance of the Section 179D Energy Efficient Commercial Buildings Deduction, building owners have leveraged billions of dollars in private capital to introduce energy efficient enhancements in thousands of commercial and larger multifamily buildings. These enhancements have created and preserved hundreds of thousands of jobs over the life of the Section 179D tax deduction, and have helped our country make strides toward energy independence.
Established in 2005, Section 179D provides a deduction of up to $1.80 per square foot for energy-efficient improvements to commercial buildings. Without this provision, building owners could be required to depreciate the cost of improvements over a period of several years. Section 179D accelerates this process through an enhanced deduction, stimulating the economy and jobs by incentivizing energy efficient construction.
Section 179D also helps promote the proper allocation of incentives in the real estate development process. Energy efficiency improvements often carry a higher cost that is recouped by reduced energy consumption over time; however, neither the owners nor tenants of commercial buildings may have an adequate incentive to make the upfront investment. In the case of building owners, this is because energy costs are generally borne by tenants. However, in multitenant structures a single tenant is unlikely to invest in improvements on their own. Section 179D solves this incentive problem by encouraging building owners to install energy-efficient improvements that help their tenants save money on electricity, water, and climate control costs.
Section 179D also includes an allocation provision that allows tax-exempt public entities to allocate the deduction to the designer of a building or efficiency project (such as an architect or engineer). This feature provides cost-effective support for the development of energy-efficient buildings by school districts, state governments, and other public sector entities and ultimately saves taxpayer dollars through lower energy costs for public buildings.
For tax year 2017, extending § l 79D would have avoided over 826,000 tons of carbon dioxide emissions ...
... equivalent to taking nearly 160,000 cars off the road ...
... and planting over 12 million trees.
Permanent extension of Sec. l 79D would compound these benefits over time. A 10-year extension of this important tax policy starting in 2017 would help avoid an estimated 40.8 million tons of CO2 emissions, equivalent to taking nearly 7.9 million cars off the road or planting 617 million trees.
COMPOUNDING BENEFITS OF EXTENDING §179D
A long-term or permanent extension of Section 179D is critical to fueling the deduction’s potential for economic growth. Section 179D is set to expire at the end of this year and the uncertain availability of the deduction from year-to-year substantially diminishes the incentive to incorporate energy efficient features into new and existing buildings because the deduction can only be claimed in the year construction is completed – continued short-term extensions of Section 179D mean that the U.S. economy could lose out on billions of dollars of economic activity that would otherwise be driven by Section 179D given the uncertainty about the availability of the deduction going forward.
The Coalition for Energy Efficient Jobs & Investment welcomes organizations and companies to join our advocacy efforts towards permanently extending and enhancing the Section 179D Energy Efficient Commercial Buildings Deduction. Members of the Coalition receive regular updates on any potential extensions of Section 179D and have the ability to co-sign letters to Members of Congress and Congressional committees, and participate in advocacy meetings on Capitol Hill as the opportunity arises.