Category: Energy Policy

House committees this week advanced “clean energy” portions of the $3.5 trillion reconciliation plan along party lines, including several measures supported by The Real Estate Roundtable. 

Clean Energy Tax Incentives

• The Ways & Means Committee this week approved “green energy” portions of the reconciliation package. (Bill text [Subtitle G); section by section)
   
• The Committee approved significant changes to existing tax credits that incentivize investments in solar, wind, combined heat and power (CHP) and fuel cell systems – and expanded them to also include energy storage and dynamic glass properties.
• These renewable energy investments would be subject to an “elective pay” option that can allow entities with little appetite for tax credits to request a payment equal to the value of the credit.
• Investments in EV charging stations and high-voltage transmission lines (needed to support delivery of renewable power over long distances) would also benefit from the elective pay option.
• The Committee also made changes intended to improve the 179D tax deduction for energy efficient buildings. The proposed changes are geared to support existing building retrofits.
• The amounts of these incentives would start at a “base rate” – and could increase to a “bonus rate” if the property owner meets certain labor provisions for Davis-Bacon wages and hiring registered apprentices.

Climate and Energy

• The House Energy and Commerce (E&C) Committee passed a $456 billion section of the reconciliation bill. (Bill text / Committee memorandum, Sept. 9 and Markup summary, Sept. 13)
   
• The centerpiece of the E&C package is a Clean Electricity Performance Program (CEPP). It would offer federal Energy Department “incentive payments” to electric utilities that meet clean energy targets and shift to zero-emissions sources (i.e., nuclear, hydropower, wind, solar, geothermal).
   
•  A nationwide CEPP could accelerate “greening” the grid and help real estate and other sectors accommodate increasing demands from investors and regulators to source the electricity they purchase from renewable power.
   
• However, Sen. Joe Manchin (D-WV), chair of the Senate Energy and Natural Resources Committee and a key centrist vote needed for ultimate passage of a reconciliation package, has questioned the need for the CEPP program. He has stated that utilities should not receive taxpayer funds because the electricity sector’s’ transition to clean power sources is already happening. (Politico and E&E News, Sept 14) 

Other elements of the E&C Committee’s bill include:

• Grants for state/localities to adopt most recent and zero-energy building codes; and
• A rebate program for electric vehicle charging infrastructure with set asides for individuals, small businesses, and low-income communities.

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The growing number of state and local mandates to reduce GHG emissions and increase renewable energy supplies are driving the need for uniform and voluntary federal-level practices to measure and price carbon, The Roundtable advised in comments submitted on Tuesday.

• Commercial real estate stakeholders are paying increased attention to their “energy supply chain” and need to know “where the electricity they purchase derives from,” The Roundtable wrote in a Nov. 10 letter to the Federal Energy Regulatory Commission (FERC).

• This is because dozens of state and city laws are setting energy measurement, reduction, and emissions targets on buildings, and imposing renewable energy “portfolio standards” that require greater power supplies from solar, wind, and other carbon-free sources.

• These state and local mandates have “effectively forced the issue – throughout the United States – that carbon emissions are an economic liability, and carbon reductions are an economic asset,” the letter explains.  Environmental demands from investors, tenants, employee talent, and other audiences also impel real estate owners to voluntarily purchase “clean” power and “offset” carbon emissions.

• While FERC itself lacks authority from Congress to set a price on carbon, within the Commission’s sphere of regulating bulk electricity sales in “wholesale markets” it can play a “vital role to help facilitate a harmonious nationwide system of standards relating to carbon measurement and pricing,” the comment letter provides.

SPAC Involvement

• The Roundtable’s Sustainability Policy Advisory Committee (SPAC) – chaired by Tony Malkin (Chairman, President and CEO, Empire State Realty Trust), above left,  and vice-chaired by Dan Egan (Senior Vice President, Vornado Realty Trust), right, – directed the course of the comments, which also provides:

• FERC should encourage jurisdictions to rely on federal data provided by power plants and managed by the Environmental Protection Agency (EPA) – known as “eGRID” – as the unifying information source to measure how combustion of various fuels used across the country contribute to GHG emissions;

• Federal measurement standards can support “the types of long-term price signals that our energy future demands,” and minimize a confusing a “hodgepodge” in emerging state and regional markets that already treat carbon as a commodity (such as through the purchase of renewable energy certificates (RECs));

• Any government revenue raised by state-level carbon pricing regimes should be returned to commercial, residential, and other consumers to help defray their energy costs. Sums from any such “carbon dividend” should also be channeled to create jobs by modernizing energy infrastructure and electrifying the grid.

“The SPAC has been hard at work for years on real estate related topics around energy production, distribution, consumption, and pricing that now are front and center,” Malkin said.  “Our members can be comfortable that they have excellent representation and access to information, that RER is on its front foot here, and that representation on SPAC by our members is critical to their ability to get the best information and have the opportunity to help inform The Roundtable’s actions.”

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