Federal Tax Deductions for Commercial Buildings Tax deductions are available for equipment placed in service before December 31, 2013. Up to $1.80/sf is available for buildings that meet ASHRAE Standard 90.1-2001, and reduce heating and cooling energy by 50%. Alternatively, up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems
Environmental Protection Agency
US Department of Energy
o Commercial Buildings Energy Consumption Survey (www.eia.doe.gov/emeu/cbecs) The latest survey is 2003. The 2007 survey should be released fall 2009.
o Energy Information Outlook
Commercial Tax Credits
Sections 103, 104, and 105 of EIEA2008 Title I extend or expand tax credits to businesses for investment in energy efficiency and renewable energy properties.
· Section 103 extends the EPACT2005 business ITCs (30 percent for solar energy systems and fuel cells, 10 percent for microturbines) through 2016; expands the ITC to include a 10-percent credit for CHP systems through 2016; and increases the credit limit for fuel cells from $500 to $1,500 per half kilowatt of capacity.
· Section 104 provides a 30-percent business ITC through 2016 for wind turbines with an electrical capacity of 100 kilowatts or less, capped at $4,000.
· Section 105 adds a 10-percent business ITC for ground-source heat pumps through 2016. In the AEO2009 reference case, relative to a case without the tax credits, these provisions result in a 3.2- percent increase in electrical capacity in the commercial sector by 2016.
Section 303 of EIEA2008 Title III extends the EPACT2005 tax deduction allowed for expenditures on energy-efficient commercial building property through 2013. This provision is not reflected in AEO2009, because NEMS does not include economic analysis at the building level.
Under EIEA2008 Title I, Energy Production Incentives, Section 103 provides an ITC for qualifying CHP systems placed in service before January 1, 2017. Systems with up to 15 megawatts of electrical capacity qualify for an ITC up to 10 percent of the installed cost. For systems between 15 and 50 megawatts, the percentage tax credit declines linearly with the capacity, from 10 percent to 3 percent. To qualify, systems must exceed 60-percent fuel efficiency, with a minimum of 20 percent each for useful thermal and
electrical energy produced. The provision was modeled in AEO2009 by adjusting the assumed capital cost of industrial CHP systems to reflect the applicable credit.
Section 108 extends an existing PTC, originally created under the American Jobs Creation Act of 2004 for new refined coal facilities producing steam coal, to those that produce metallurgical coal for the steel industry. The credit applies to coal processed with liquefied coal waste sludge and steel industry coal -(defined as coal used for feedstock in coke manufacture). The production credit for steel industry coal is $2 per barrel of oil equivalent actually produced (equivalent to 34 cents per million Btu or $8.55 per short ton) over the first 10 years of operation for plants placed in service in 2008 and 2009. Because the AEO2009 NEMS does not include the level of detail addressed by this tax credit, its incremental effect is not reflected in AEO2009. To the extent that the credit is passed on from coal suppliers as a reduction in the price of metallurgical coal, the provision would tend to reduce steel production costs and provide an incentive for domestic manufacture of coke.
Section 103 extends the 30-percent ITC for businessowned solar facilities to plants entering service -through December 31, 2016. The tax credit is valued at 30 percent of the initial investment cost for solar thermal and PV generating facilities that are owned by tax-paying businesses (residential owners can take advantage of tax credits discussed below; other forms of government assistance may be available to taxexempt owners). Starting in 2017, eligible facilities will receive only a 10-percent ITC, which is not scheduled to expire. The extension through 2016 and the permanent 10-percent ITC are represented in AEO2009.
Section 107 authorizes continuation of the Clean and Renewable Energy Bonds (CREB) program at a level of $800 million. CREBs are issued by tax-exempt project owners (municipals and cooperatives) to raise capital for the construction of renewable energy plants. Interest on the bonds is paid by the Federal Government in the form of tax credits to the bond holders, thus providing the bond issuer with interest- free financing for qualified projects. Because NEMS assumes that all new renewable generation capacity will come from independent power producers, this provision, which targets public utilities, is not included in AEO2009.