Category: Legislation + Regulation

Bipartisan Legislation Introduced to Make 179D Tax Deduction Permanent

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…

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.

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Study Documents Major Job Growth from 179D Tax Deduction

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…

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.

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AIA Takes Aim at Major Shortcomings in Federal FY18 Budget Plans

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,…

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.

“It’s difficult to see how a 31 percent cut to the Environmental Protection Agency’s (EPA) budget strengthens that agency’s mission to protect the environment. The proposed cuts eliminate successful and innovative programs, including Energy Star, which help to promote energy efficient buildings and cities.

“The proposed cuts at the Department of Energy (DOE) will set back the progress we’ve made in designing more efficient buildings and communities. The Administration is proposing an 18 percent cut in DOE’s non-nuclear weapons programs, including a 33 percent cut to the Building Technologies Office.

“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.”

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AIA Opposes U.S. Withdrawal from Climate Treaty

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 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.”

“The AIA will not retreat from its long-established efforts to conserve energy and to deploy renewable resources in buildings. We will continue to lead in efforts to curb the use of fuels and technologies that needlessly pollute our atmosphere and harm our environment. This makes good sense economically, and it is in the best interests of those we serve: our clients and the public.

“We will also urge our members throughout the United States and the world to assist cities, states, organizations and citizen groups in meeting the aims of the climate accord.

“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.”

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NEMA Calls on Secretary of Energy to Complete Rulemaking for General Service Lamps

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…

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.”

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Regulatory Roundup

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…

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.

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Metal Halide Rule Takes Effect

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…

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.

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House Bill Seeks to Extend 179D Tax Deduction

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…

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.

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ENERGY STAR Lamps V2.0

Below is my lighting column published in the July issue of tED Magazine. Reprinted with permission. Founded in 1992, the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR is a voluntary…

Below is my lighting column published in the July issue of tED Magazine. Reprinted with permission.

Founded in 1992, the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR is a voluntary product labeling program designed to help consumers identify and promote energy-efficient products. These products include lamps and residential luminaires.

Consumers recognize the ENERGY STAR label as meaning lighting products demonstrates equivalent or better performance as the traditional technologies they replace, but use significantly less energy. This approach promotes both quality and energy efficiency.

In the lamps category, certification to the influential ENERGY STAR Lamp Specification has come to mean qualifying for the large majority of utility rebate programs. More than 370 utilities in the United States run about 1,200 product incentive and promotion programs for ENERGY STAR-certified products, with an estimated budget of about $535 million. This represents about 95 percent of utility incentive programs nationwide. EPA estimates that in 2014, about 70 percent of compact fluorescent lamps and 75 percent of LED lamps sold were ENERGY STAR-certified.

“The ENERGY STAR mark is well-recognized in the marketplace, and there’s a lot of consumer awareness around it,” says Joseph Howley, Manager of Industry Relations, GE Lighting. “Most buyers see ENERGY STAR and are confident they’re buying a quality energy-efficient product. Your average consumer might not have the expertise to keep up with LED technology and how quickly it continues to evolve—so they rely on ENERGY STAR.”

The Lamps Version 2.0 specification was released on December 31, 2015. The effective date is January 2, 2017. To bear the ENERGY STAR mark after that time, a lamp must be certified to V2.0. There will be no grandfathering, meaning existing products must recertify. The new requirements are stricter and require more rigorous testing, which will have a big impact on omnidirectional, directional and decorative lamps that qualify for the ENERGY STAR mark.

The new ENERGY STAR Lamp Specification favors LED lamps. Image courtesy of OSRAM SYLVANIA.

The new ENERGY STAR Lamp Specification favors LED lamps. Image courtesy of OSRAM SYLVANIA.

Lamps V2.0

According to Taylor Jantz-Sell, ENERGY STAR Lighting Program Manager, U.S. EPA, V2.0 has four primary goals:

• Capture more energy savings in step with growing improvements in solid-state lighting while improving quality and, where possible, reducing cost. For example, for all lamps, minimum efficacy and lumen and color maintenance requirements increased, while for omnidirectional lamps, minimum service life decreased.
• Broaden the scope for features for eligible lamp types, such as color-tuning and connected (featuring ability to communicate) products. This is likely to stimulate demand for these value-added products.
• Harmonize with the program’s Luminaires V2.0 specification, such as allowing a turnkey way to certify decorative luminaires simply by including an ENERGY STAR-certified lamp.
• Allow for more cost-effective lamp designs to earn ENERGY STAR.

“EPA hopes the result of the new specification will be increased adoption of high-quality, highly efficient light bulbs that have been third-party-certified to a well-thought-out set of requirements,” says Jantz-Sell.

“In certain geographies, electrical distributors may need to stock ENERGY STAR V1.0 and V2.0 products to support current customer demands and utility incentives, respectively,” says Nathan Marafioti, Marketing Director LED – North America, Philips Lighting. “Electrical distributors should expect and prepare for a continued increase in LED lamp conversion. Many utility programs will shift funding from compact fluorescent lamps to LED, which will improve the value of and stimulate LED adoption.”

Omnidirectional lamps

Omnidirectional lamps emit light in all directions. Lamps V2.0 increases the minimum efficacy requirement from 55 lumens/W for lamps smaller than 15W and 65 lumens/W for lamps 15+W to 70 or 80 lumens/W based on color rendering index (CRI) rating. If the lamp has a CRI lower than 90, the product must achieve a minimum efficacy of 80 lumens/W; if 90+ CRI, it must have an efficacy of at least 70 lumens/W.

Additionally, V2.0 reduced the service life requirement from 25,000 hours to 15,000 hours, adjusted the light distribution requirements, and reduced the power factor requirement from 0.7 to 0.6 for 5-10W products. These changes were implemented to allow manufacturers to reduce cost and provide competitive, high-quality LED products to consumers at a price point they’ve become to expect from ENERGY STAR-certified compact fluorescent lamps.

“Currently, there are no compact fluorescent products on the market that are 2.0 compliant,” Marafioti says. “While we are constantly evaluating the market need and opportunity for different products for our customers, it is likely that our primary efforts will continue to focus on driving LED adoption.”

The new specification favors LED technology. “Almost all of today’s omnidirectional lamps from proven brands meet the ENERGY STAR 2.0 requirements,” says Alfred LaSpina, Product Group Marketing Manager, OSRAM SYLVANIA. “The transition will be seamless, and the end-user won’t be impacted.” He adds that SYLVANIA will continue to offer compact fluorescent lamps to provide customers with a choice.

While many new LED lamps meet V2.0’s 80 lumens/W, many existing LED lamps do not, which may require some design changes and a higher overall cost. “GE does not anticipate the new requirements will affect the broad availability of its ENERGY STAR-certified LED products, but we do expect that demand for those same products will increase,” says Chris Gonzales, Senior Product Manager, Current, powered by GE. GE is currently phasing out production of compact fluorescent lamps for the North American market in 2017 due to expectations of a significant downturn in demand.

Directional lamps

Directional lamps emit light in a single direction. Lamps V2.0 increases the minimum efficacy requirement for directional lamps, again based on CRI. The requirement increased from 40 lumens/W for lamps smaller than 20W and 50 lumens/W for 20+W lamps to 70 lumens/W ( “We expect that compact fluorescent reflector lamps will be effectively eliminated from ENERGY STAR consideration by the new requirement,” says Roland Rolle, Senior Product Manager, GE Lighting. “We will have a wide selection of decorative and directional LED lamps that meet V2.0, but no CFLs.”

“Additional scale and costs continue to come down for LEDs, including directional lamps,” LaSpina says. “For LED lamps that currently comply with 1.0 but will not meet 2.0, their price points will continue to make them attractive options even without the utility incentives. We have spec-grade products compliant with 2.0 and available for utility rebates, and we also have products engineered for value-driven customers. It comes down to offering a wide range so the distributor has the right light for the right application, with or without utility rebates.”

Decorative lamps

For decorative lamps, the efficacy requirements increased from 50 to 60 lumens/W based on wattage to 65 lumens/W for all lamps. ST, a new lamp shape emulating old-fashioned filament-style lamps, is now included.

“Like the other two categories, we expect nearly all compact fluorescent decorative lamps will be eliminated from the ENERGY STAR program under V2.0,” says Rolle. “We anticipate the entire market will move toward LED.”

Final word

“If distributors are in incentive-laden areas, they will have to change to compliant products to take advantage of rebates,” LaSpina says. “Distributors will need to scrub their products and vendor listing to make sure they are stocking V2.0 products. That is why it is beneficial to partner with a proven vendor who has been working with EPA already to be prepared for this version, so the transition is seamless.”

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Second Phase of Incandescent Energy Standards to Arrive in 2020 and Disrupt Household Lamp Market

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…

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.

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