Bipartisan legislation has been introduced in Congress that would make permanent a key energy efficiency tax incentive for owners and designers of energy efficient buildings while expanding its benefits to designers of hospitals, schools, tribal community facilities and other non-profits.

H.R. 3507, introduced by Rep. Dave Reichert (R-WA) and co-sponsored by Rep. Tom Reed (R-NY), and Rep. Earl Blumenauer (D-OR), also modifies Section 179D of the tax code – the Energy-Efficient Commercial Building Deduction – to make small to mid-sized architect firms organized as subchapter S corporations eligible for the deduction.

Section 179D allowed qualifying building owners and businesses to receive an up to $1.80 per square foot tax deduction for their energy-efficient buildings placed into service during all open tax years. It was originally passed by Congress as part of the Energy Policy Act of 2005 and had been extended several times until it last expired at the end of 2016.

On July 27, 2017, the bill was referred to the Ways and Means Committee. You can follow its progress here.

As many as 77,000 new design and construction jobs would be created annually over 10 years–along with almost $7.4 billion more in annual GDP–if Congress and the Administration continue an important energy efficiency tax policy, according to an economic impact study by Regional Economic Models Inc. (REMI).

Section 179D of the tax code, also known as the Energy Efficient Commercial Buildings Deduction, allows qualifying building owners and businesses to receive up to a $1.80 per square foot tax deduction for certain energy efficient improvements placed into service during all open tax years. It was originally passed by Congress as part of the Energy Policy Act of 2005 in direct response to broader energy usage and independence concerns.

The REMI study documents job creation and GDP growth under three scenarios that continue energy efficiency tax policies:

· Modernizing Section 179D, including increasing the deduction to $3 per square foot and making certain other reforms to strengthen it, generates significant job creation – on average 76,529 per year during its first decade.

· A long-term extension of the deduction at its current $1.80 per square foot level creates an average of almost 41,000 jobs per year over 10 years.

· A long-term extension at $1.80 per square foot, extension of the deduction to hospitals, schools, and other non-profits and to tribal community facilities, and an increase in the energy efficiency requirements creates almost 40,000 jobs per year over the next decade.

The economic growth and job creation generated by a modernized Section 179D would result in a striking GDP return of ten to one when considering the cost of the tax policy, the study finds.

The study was co-funded by the American Institute of Architects (AIA), along with Alliant Group LP, Ameresco, Blue Energy Group, Concord Energy Strategies, Energy Tax Savers, Energy Systems Group, National Electrical Manufacturers Association (NEMA), the Natural Resources Defense Council (NRDC) and the United States Green Building Council (USGBC).

Click here to see the full study.

The American Institute of Architects (AIA) issued the following statement after the Administration submitted to Congress its final Fiscal Year 2018 federal budget on May 23.

AIA President Thomas Vonier, FAIA, said:

“Unfortunately, this budget includes many of the same cuts we criticized in the March draft of the Administration’s budget — in fact, it makes further cuts to programs that are most valuable to architects and their clients.

“Today, 654 architecture firms signed a letter coordinated by the AIA, to Energy Secretary Rick Perry, identifying the programs we know are crucial to preserving America’s leadership in energy efficient design and construction.”

The American Institute of Architects (AIA) reaffirmed its commitment to climate change mitigation and announced it was opposing the administration’s decision to withdraw the United States as a signatory to the Paris Agreement. That accord, signed in late 2015 within the United Nations Framework Convention on Climate Change (UNFCCC), commits the international community to fighting harmful greenhouse gas emissions.

AIA President Thomas Vonier, FAIA, said:

“The United States must remain a leader in the battle to cease harmful and needless practices that damage the planet and its climate, acting out of both environmental concerns and national economic interests. Instead of helping our economy, as the Administration contends, withdrawing from the Paris Agreement will put us behind our major global competitors.”

“By adhering to our values as a profession that is concerned with human habitat and the health of our environment, we will help to mitigate the harm this decision will do to our economy and to America’s stature across the globe.”

The National Electrical Manufacturers Association (NEMA) has formally requested that the Secretary of Energy complete a rulemaking for general service lamps that Congress required in the Energy Independence and Security Act of 2007 (EISA-2007).

The Department of Energy (DOE) began the rulemaking in December 2013 and published two rules on January 19, 2017, addressing only one of the issues that Congress required for the rulemaking. These rules did not address the key issue on which Congress required DOE to act: whether or not standards for general service incandescent lamps should be amended to be more stringent than the standards for those lamps that Congress enacted in EISA-2007. Nor did the rules address robust standards for LED lamps that were originally proposed by DOE in 2016.

NEMA has also called upon DOE to establish a robust, economically justified national efficiency standard for general service LED lamps and to consider standards for certain other LED lamps.

“The statutory text is clear that Congress’ primary interest for this rulemaking was to determine whether general service incandescent lamps and other incandescent lamps that were exempt from regulation could be made more efficient and subject to higher standards,” explained NEMA General Counsel Clark Silcox. “The January 19th rules avoided making that decision, but Congress required a decision on that question to be made. NEMA believes the Department of Energy flipped Congress’ intent on its head and mistakenly concluded that its job was to eliminate the energy-efficient halogen incandescent light bulb rather than determine whether a higher efficiency standard for those bulbs could be economically justified and technologically feasible. NEMA’s view is that the marketplace is doing an excellent job of transitioning to more efficient lighting solutions.”

In a letter to Energy Secretary Rick Perry dated March 3, 2017, NEMA informed the secretary that the lighting market is transitioning to more efficient lighting:

Consumers are buying more efficient light bulbs at unprecedented rates because they see the value in these lamps. NEMA and its members strongly support the market’s transition and Congress’ interest in seeing that happen; however it would be extremely unfortunate if that orderly transition is disrupted—impacting American consumers and workers who buy and make these lamps—by the department’s failure to follow the statutory text and requirements for this rulemaking. NEMA’s interest is in promoting greater adoption of energy efficient lighting, ensuring consumer choice among energy efficient lighting options, preserving jobs, and ensuring that the market satisfies consumer demand for quality lighting products.

If DOE completes the rulemaking in the manner required by Congress, it will decide either that more stringent standards for the general service incandescent lamp can be economically justified and are technologically feasible or that Congress’ EISA-2007 standards for general service incandescent lamps will be left intact. The secretary can also consider whether to amend standards for the compact fluorescent lamp and whether to enact national standards for general service LED lamps. NEMA made constructive proposals for those lamps in 2016 as part of the rulemaking and has asked the secretary to consider those proposals.

“NEMA’s proposal for a robust national standard for LED lamps would raise the bar nationwide for general service LED lamps and is a far more sensible and energy-efficient approach than doing nothing nationwide,” said Silcox.

“NEMA is aware of media reports that some hold the view that a 45 lumen-per-watt standard for all of these types of lamps is going into effect in January 2020,” added Silcox. “But that remains to be determined, and it is premature to say either yes or no until DOE follows the rules laid out by Congress in the 2007 law and addresses all the issues that Congress directed DOE to address. The NEMA proposal for uniform national LED standards is considerably higher than a 45 lumen-per-watt standard that some states are promoting.”

In a separate but related matter, NEMA has asked the federal appeals court in Richmond, Virginia, to review the two rules that DOE published on January 19. “The two rules relate to whether certain specialty lamps are general service lamps and would be subject to the applicable standards,” explained Silcox. “This is a matter of statutory construction, and NEMA believes that DOE impermissibly rewrote the statute in making its decision. Contrary to certain reports, the January 19 rules issued by DOE explicitly did not establish energy efficiency requirements; the rules only address the definition of what constitutes general service lamps and discontinuing exemptions from standards for certain lamps.”

In a recent column for ELECTRICAL CONTRACTOR, I provided an update on the 179D energy efficiency tax deduction, ENERGY STAR V.2 Lamps criteria and V.2 Luminaires criteria, and metal halide rules taking effect.

Check it out here.

A recent blog post on tEDmag.com talks about a more recent Department of Energy ruling on general service lamps, in which DOE expanded the definition of lamps that will face energy standards in 2020. This was a curious ruling. DOE appears to remove several significant lamp exemptions, while appearing to include reflector lamps, which are separately regulated. Meanwhile, DOE did not produce new energy standards by the deadline, which means, according to the language of the Energy Independence and Security Act of 2008, that general service lamps will face a backstop energy standard of 45 lumens/W in 2020. This situation appears to be in flux, and I’ll cover it in detail as the situation becomes more clear.

Check it out here.

My contributions to the February issue of tED Magazine included an update on metal halide rules. Reprinted with permission.

On February 10, 2017, U.S. Department of Energy (DOE) rules take effect that regulate the efficiency of metal halide lamp ballasts sold as part of new luminaires.

These rules update existing energy efficiency standards created by the Energy Independence and Security Act of 2007. The previous rules virtually eliminated probe-start lamps and ballasts from new medium-wattage (150-500W) luminaires, a segment of the market representing the majority of metal halide shipments.

The new rules establish minimum ballast efficiency standards for luminaires based on ballast type, location (indoor or outdoor) and rated lamp wattage (50-100, 101-149, 150-250, 251-500, 501-1000). DOE essentially modified standards for the medium-wattage segment while establishing new standards for the low-wattage (50-149W) and high-wattage (501-1000W) segments of the market.

Two of the existing exemptions remain in effect. These include 480V electronic ballasts and regulated-lag ballasts limited to applications such as heavy industrial, security and street and tunnel lighting. However, metal halide luminaires rated only for 150W lamps, rated for use in wet locations, and containing a ballast rated at ambient air temperatures higher than 50°C are no longer exempted.

Otherwise, the rules do not cover 1001-2000W lamp ballasts. They also do not cover replacement ballasts sold to maintain luminaires already installed.

For the past three years, manufacturers have evaluated their products on a case-by-case basis and continued, redesigned or discontinued them. Given metal halide is a declining technology under strong direct competition by solid-state lighting, a significant number of products may have been discontinued. In other cases, luminaires may have been redesigned for a different ballast and then retested. The result may be gaps in availability and an aftermarket mixing designs and redesigns. Check with the luminaire manufacturer about availability.

Compliant ballast options include pulse-start magnetic and electronic. Pulse-start magnetic ballasts provide the benefits of higher efficiency, superior lumen maintenance and greater color stability than probe-start ballasts. Electronic ballasts operate at an even higher efficiency, resulting in about 10 percent energy savings compared to magnetic ballasts. They may also improve lumen maintenance, extend lamp life and offer other features such as dimming. However, their higher cost and lower degree of ruggedness compared to magnetic ballasts have limited market penetration. The ballast may be high-frequency or low-frequency square wave. As high-frequency electronic metal halide ballasts are not compatible with all metal halide lamps, the lamp and ballast must be properly matched to avoid issues.

When it released the rule in 2014, DOE estimated energy savings would recoup the cost premium in 4.5 to nearly 20 years, depending on the luminaire and other factors. An exception was 1000W lamp ballasts with an estimated payback of less than a year.

For more information, consult the luminaire manufacturers.

Created by the Energy Policy Act of 2005, the Commercial Buildings Tax Deduction (Section 179D of the tax code) provides an accelerated tax deduction of up to $1.80/sq.ft. as an incentive to install energy-efficient building systems, including interior lighting. The tax deduction expired and renewed several times over the years, most recently with the passage of the 2015 PATH Act, which retroactively extended the CBTD from December 31, 2014 to December 31, 2016. PATH made it more difficult to qualify for the tax deduction by raising the energy efficiency baseline from the 2001 to the 2007 version of the ASHRAE/IES 90.1 energy standard.

The CBTD is due to expire December 31, 2016. As a popular tax provision, however, it may be renewed again in some form in the future. On November 17, 2016, Rep. Alan Grayson (D-FL) introduced HR 6361, which would extend the CBTD for another two years. He also introduced HR 6360, which would extend it for one year. On November 17, Rep. Dave Reichert (R-WA) introduced HR 6376 [co-sponsored by Rep. Tom Reed (R-NY), Rep. Earl Blumenauer (D-OR), and Rep. Chris Van Hollen (D-MD)], which would modify the CBTD to make small to mid-sized architect firms organized as subchapter S corporations eligible for the deduction. This allows nonprofits the ability to allocate the deduction to designers. Unfortunately, PredictGov gives these bills a 1% chance of being enacted, though an extension and modifications may occur as a component of future omnibus tax legislation.

In the meantime, lighting upgrade projects completed in 2016 may qualify for the CBTD. Click here to learn more.

The Energy Independence and Security Act of 2007 established energy standards for 40-100W general-service incandescent lamps, which took effect 2012-2014 and contributed to a significant decline in incandescent A-lamp sales in recent years. U.S. manufacturers have complied despite Congressional appropriations bills specifically prohibiting the Department of Energy from enforcing the Act’s provisions (which only served to put compliant manufacturers at risk).

Consumers continued to enjoy a choice of halogen, LED and compact fluorescent A-lamps. The market largely shifted to halogen A-lamps. High-quality LED lamps, which cost $50 just a few years ago, are now available for under $5 and are experiencing rapid growth in demand.

The Act actually included two phases of energy standards. The first has been completed. The Act included a backstop provision of 45 lumens/W that would automatically go into effect if DOE did not complete a revised standard by January 1, 2017. DOE has announced that this backstop will be triggered, meaning in 2020, the new standard will be 45 lumens/W.

Currently, halogen A-lamps–e.g., 43W lamps that replace 60W incandescent lamps–do not comply with this standard, which will likely put the market back into flux.

Learn more here.