Energy Policy – Page 3 – The Real Estate Roundtable

Senate and House Pass The Inflation Reduction Act of 2022

Posted on August 12, 2022January 23, 2024 by Trey Jackson

The Inflation Reduction Act of 2022 (IRA) heads to President Joe Biden’s desk for his signature, following passage by the House today and the Senate on Sunday. After weeks of negotiations, the comprehensive economic package primarily brokered by Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) reflects Democratic priorities to combat climate change, reduce prescription drug costs, and lower the deficit by roughly $300 billion over the next decade. (Washington Post, Aug. 7; Roundtable Weekly, July 29)

Why It Matters

After Congress passed the IRA today, President Biden stated, “With the passage of the Inflation Reduction Act in the House, families will see lower prescription drug prices, lower health care costs, and lower energy costs. I look forward to signing it into law next week” (Twitter, Aug. 12 | Wall Street Journal, Aug. 12)
The $790 billion reconciliation proposal includes nearly $370 billion in climate spending that affects “clean energy” measures important to commercial real estate, the largest federal clean energy investment in U.S. history. (NPR, Aug. 7) (see story below)

CRE Impact

Real Estate Roundtable President and CEO Jeffrey DeBoer commented today, “The revised Inflation Reduction Act is a welcome step toward boosting economic growth by spurring extensive investments in clean energy and climate measures that benefit both our industry and our country. We applaud Congress for recognizing and protecting the critical role of carried interest provisions in incentivizing the risk-taking necessary for robust economic development. We look forward to working with our partners in industry and government to implement this legislation.”

Proposed changes to the taxation of carried interest were cut from the IRA last week at the request of Sen. Kyrsten Sinema (D-AZ). The Roundtable and 14 other national real estate organizations wrote to all members of Congress on Aug. 3 in strong opposition to the measure. (Coalition letter, Aug. 3 | Roundtable Weekly, Aug. 5 )
The IRA’s largest tax increase is a 15% corporate minimum tax on businesses with profits over $1 billion whose reported book income exceeds reported taxable income. The measure is estimated to raise $313 billion.
The final bill includes a 1 percent tax on what public companies spend on stock buybacks. However, it did not include any changes to the state and local tax (SALT) deduction. (CQ, Aug. 7)
The package also includes protections that would preserve the value of the low-income housing tax credit for investors (typically large banks) that use the credit to reduce their effective tax rate.

In the coming weeks, The Roundtable will continue updating summaries of the tax and energy provisions in the IRA while also analyzing the direct and indirect impact on commercial real estate. (See below for Clean Energy Tax Incentives Fact Sheet)

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Senate Democrats Strike Deal to Speed-Up Federal Permits for Major Energy Projects

Posted on August 6, 2022April 25, 2024 by Trey Jackson

Sen. Joe Manchin (D-WV) and Democratic Senate leadership reached a side deal on federal energy permitting this week, separate from the larger reconciliation bill agreement addressing climate, taxes, and drug pricing reform. (PoliticoPro, One-page summary of agreement and Washington Post, Aug. 1)

Energy Permitting Provisions

An outline of the energy permitting agreement shows that an eventual bill would direct the President to designate and periodically update a list of at least 25 high-priority energy infrastructure projects and prioritize their approvals by federal agencies.
The agreement could lead to policies that accelerate federal approvals for long-distance transmission lines needed to help “clean the grid” and deliver renewable energy generated in rural areas to cities.
The agreement would also limit National Environmental Policy Act (NEPA) reviews for major federal projects to two years, and one year for lower-impact projects. NEPA requires federal agencies to assess alternatives to their proposed actions that have lesser environmental impacts. (EPA fact sheet)
The Democratic senators agreed with House Speaker Nancy Pelosi (D-CA) that the permitting agreement could be added to a stopgap spending measure to fund the government after Sept. 30. (BGov, Aug. 3)
In May, the Biden administration released a Permitting Action Plan to strengthen and accelerate Federal permitting and environmental reviews. Another package of White House changes to permitting rules is expected later this year. (Roundtable Weekly, April 22 | White House news release, May 11 | BGov, Aug. 4).

Climate Financial Risk Tool

The Treasury Department launched its Climate Data and Analytics Hub pilot, which aims to provide regulators with data, software and tools to gauge climate change risk to the financial system. (Treasury Department Fact Sheet)

Initial access to the pilot will be limited to the Federal Reserve Board of Governors (FRB) and the Federal Reserve Bank of New York (FRBNY), with the goal of expanding access to all of the Financial Stability Oversight Council (FSOC) member agencies.

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Proposed Carried Interest Provisions, Opposed by Real Estate Industry, Cut From Reconciliation Bill

Posted on August 6, 2022October 27, 2023 by Trey Jackson

Proposed changes to the taxation of carried interest were cut from Senate Democrats’ broad Inflation Reduction Act (IRA) yesterday at the request of centrist Sen. Kyrsten Sinema (D-AZ). The Roundtable and 14 other national real estate organizations wrote to all members of Congress on Aug. 3 in strong opposition to the measure. (Coalition letter, Aug. 3 | Wall Street Journal, Aug. 4 |Tax Notes, Aug. 5). Photo above: Sen. Sinema at The Roundtable’s 2022 Spring Meeting.

Vote on Revised Reconciliation Bill

Sinema announced her decision in a statement released Thursday night, commenting she would “move forward” with the $790 billion reconciliation bill after removal of the carried interest provision—subject to the Senate Parliamentarian’s review of the revised bill.
Yesterday, Senate Majority Leader Chuck Schumer (D-NY) announced that the chamber will begin consideration of the bill on Aug. 6, setting up a weekend process of around-the-clock votes on hundreds of amendments to the bill.
Real Estate Roundtable President and CEO Jeffrey DeBoer commented today, “The wide-ranging climate measures in the revised bill include the most extensive clean energy investments ever considered by Congress—a positive step welcomed by the real estate industry. We are also pleased to see that carried interest provisions in the original version of the Inflation Reduction Act are out, since they would have clearly harmed the residential and commercial real estate industries, job creation and the economy.”

Real Estate’s Carried Interest Opposition

The real estate coalition urged policymakers to preserve current carried interest law and detailed major concerns with the proposed changes to carried interest that were in the original IRA, brokered last week between Sens. Schumer and Joe Manchin (D-WV). (Coalition letter, Aug. 3 and Roundtable Weekly, July 29)
The Aug. 3 coalition letter noted, “The carried interest proposal would slow housing production, discourage the capital needed to reimagine buildings to meet post-pandemic business needs, hamper job creation and create an additional unknown in an already confusing economic environment.”
The real estate coalition letter concluded, “Now is not the time to impose a tax increase on the countless Americans who use partnerships to develop, own, and operate housing and other commercial real estate. We urge you to preserve current tax law as it relates to carried interest.”

Senate Considers Changes

Senate Democrats are making additional changes to the package, including adjusting the minimum tax on corporations and adding a 1% excise tax on stock buybacks. (New York Times, Aug. 4 and Punchbowl News, Aug. 5)
Before a final Senate vote can be held, the Senate Parliamentarian must ensure the bill complies with special budget reconciliation rules, which require provisions directly relate to spending and revenue—not policy.
One hurdle before the Parliamentarian is a clean energy tax credit that proposes a bonus incentive to developers who pay prevailing wages on certain projects. If it is determined to be a policy change, it will be dropped from the bill. (POLITICO Power Switch, Aug. 3)
A number of the IRA’s proposed revisions to the federal tax code could leverage greater private sector investments in clean energy building technologies, including:
- A deduction to help make commercial and multifamily buildings more energy efficient (Section 179D),
- A credit to encourage investments in renewable energy generation and other low carbon equipment such as solar panels, energy storage, and combined heat and power systems (Section 48), and
- A credit to incentivize installations of EV charging stations (Section 30C).

The Roundtable continues to work with its policy advisory committees and national real estate organization partners to assess how details in the bill language could impact CRE. These policies will be a focus of discussion during The Roundtable’s Sept. 20-21 Fall Meeting in Washington, DC.

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Sens. Schumer and Manchin Agree on Reconciliation Bill With Carried Interest and Energy Efficiency Provisions

Posted on July 30, 2022October 27, 2023 by Trey Jackson

An unexpected agreement announced Wednesday night between Senate Majority Leader Chuck Schumer (D-NY), above right, and Sen. Joe Manchin (D-WV), left, on a $790 billion reconciliation proposal includes $14 billion in increased taxes on carried interest and a 15% corporate minimum tax—in addition to $369 billion in climate spending that affects “clean energy” measures important to commercial real estate.

Senate Democrats are hoping to pass some version of the Schumer-Manchin language on a party-line vote before the upper chamber begins its summer recess on Aug. 8. (Senate Democrats’ joint statement and one-page bill summary, July 27 | Committee for a Responsible Federal Budget, July 28)

Legislative Details

Today, The Real Estate Roundtable held an all-member virtual town hall to discuss major provisions within the 725-page Inflation Reduction Act (IRA) of 2022. The Roundtable is working with its policy advisory committees and national real estate organization partners to assess how details in the bill language could impact CRE.
Real Estate Roundtable President Jeffrey DeBoer stated, “The Roundtable is engaged with policymakers and Capitol Hill staff on the potential impact of the proposed bill on real estate capital formation, economic growth, clean energy investments, and affordable housing development. The industry is working together to mitigate any negative consequences for CRE before policymakers hold an eventual vote on a final bill.”

Taxes & Clean Energy

The IRA’s largest tax increase is a new 15% corporate minimum tax on businesses with profits over $1B whose reported book income exceeds reported taxable income. The measure is estimated to raise $313B. The package also includes protections that would preserve the value of the low-income housing tax credit for investors (typically large banks) that use the credit to reduce their effective tax rate.
The smallest tax increase would raise $14B in revenue by extending the capital gains holding period requirement for carried interest from 3 years to 5 years, although there is an exemption for real estate. Additionally, there are technical reforms to the holding period rules for measuring the 3- or 5-year holding period. (Deloitte Tax News & Views, July 29)
The carried interest holding period change includes a real estate exception for gain associated with assets used in a real property trade or business. The language in the IRA on carried interest is identical to text in the House Ways and Means Committee’s previous reconciliation bill last year—language that was dropped from the version that passed the full House. (Roundtable Weekly, Sept. 17, 2021)
The Schumer-Manchin agreement also proposes significant reforms to Section 179D—the tax code’s main provision to incentivize energy efficient commercial buildings. The 179D reforms are geared to encourage more existing building “retrofits” although maximum incentives amounts depend on compliance with heightened wage and labor standards.
Tax incentives are also included to encourage investments in solar panels, energy storage, and EV charging stations. (See Summary of the bill’s Energy Security and Climate Change Investments)

Timeline

There are several challenges to the Senate Democrats’ timeline for passage of the bill in early August.
Senate Democrats need all 50 members of their caucus present for an eventual budget reconciliation vote, along with Vice President Kamala Harris to break an anticipated tie with 50 Republicans. Yet Covid-19 infections have caused recent absences. (The Hill, July 28)
The bill was sent to Senate Parliamentarian Elizabeth MacDonough to see if it conforms with reconciliation budget rules, a process that will spill over into next week. (BGov, July 29)
Arizona Democratic Senator Kyrsten Sinema is a key centrist vote, considering she has long opposed changes to the taxation of carried interest. Sinema’s spokesperson Hannah Hurley said yesterday that the Senator is “reviewing the text and will need to review what comes out of the parliamentarian process.” (BGov, July 29)

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2022 Annual Report – Building a More Resilient and Dynamic Future

Posted on June 25, 2022October 27, 2023 by Trey Jackson

View Full Report – 2022 Annual Report – Building a More Resilient and Dynamic Future

Senators Joe Manchin and Lisa Murkowski Aim for Bipartisan Compromise on Energy Policy as Alternative to Stalled Build Back Better Act

Posted on May 6, 2022October 27, 2023 by Trey Jackson

Senators Joe Manchin (D-WV), left, and Lisa Murkowski (R-AK), right, have led bipartisan meetings with lawmakers over the last two weeks to explore potential areas of agreement for a scaled-back energy and climate legislative package before the midterm elections. (Politico Morning Energy and E&E News, May 5 | The Hill, April 25)

BBB Energy Measures

$300 billion in clean energy tax credits were part of last year’s failed, multi-trillion Build Back Better (BBB) Act, which Democrats advanced through the House under fast-track, filibuster-proof budget reconciliation rules. The Roundtable sent a letter in November to congressional tax writers with specific recommendations to improve the BBB bill’s energy tax provisions affecting real estate. (Roundtable Weekly, Nov. 19)
The BBB legislation stalled in the Senate after failing to attract key Democratic votes from Sens. Manchin and Kyrsten Sinema (AZ). Manchin’s concern about rising inflation led to his opposition of the bill. (Wall Street Journal, April 28)
Last week, Sen. Sinema discussed the post-BBB policy landscape during The Roundtable’s Spring Meeting in Washington. Other featured speakers included Sens. Bill Cassidy (R-LA) and John Hickenlooper (D-CO), who are among the members of the bipartisan group. (Roundtable Weekly, April 29 and E&E News, May 5)

Search for Agreement

This week, the BBB Act’s energy-related tax credits were a focus of the small bipartisan group, which also included Senate Environment and Public Works Chair Tom Carper (D-DE), above.
Carper on May 5 said, “I think some progress was made in better understanding what the Finance Committee voted on in the energy tax package that was debated and voted on months ago.” He added, “Republicans will not be anxious to support any kind of reconciliation bill. But let’s see how much we can get done in a bipartisan approach.” (Politico Morning Energy, May 5)
Another meeting participant, Sen. Kevin Cramer (R-ND), said general discussions need to eventually produce an agreement on specific measures “long before” the July 4th recess. Cramer also told E&E News that any Republican support for a bipartisan package “depends on how long Santa’s list is.”
Support for a bipartisan clean energy package would need to clear a 60-vote threshold in the Senate to pass the evenly-divided chamber before November’s midterm elections.

Sen. Chris Van Hollen (D-MD) recently stated, “I think it’s a make-or-break moment for the elements of Build Back Better that are still on the table. The clock is ticking. This is a perishable moment.” (Wall Street Journal, April 28)

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House Passes Build Back Better Act, Roundtable Urges Improvements to Green Energy Tax Provisions

Posted on November 19, 2021October 27, 2023 by Trey Jackson

House Democrats passed their “sweeping” reconciliation package of tax, health care, education, and climate initiatives Friday morning, a step that advances a “centerpiece” of President Biden’s domestic agenda and represents “the most significant restructuring of the [social] safety net in decades.” (Politico, Nov. 19)

President Biden lauded the House’s action in a statement released by the White House this morning.

Partisan Bill Advances to the Senate

All Democrats (except one) supported the $1.7 trillion Build Back Better Act (H.R. 5376), after months of negotiations between Progressives and Moderates debating the breadth of the measure and scaling back its original price tag north of $3.5 trillion. (Roundtable Weekly, Nov. 5) No House Republican voted for the bill.
Today’s party-line vote took place after the Congressional Budget Office submitted a cost analysis that satisfied the requirements of a crucial group of Democratic Moderates needed to approve the legislative package. (CBO, Nov. 18 and text of the budget reconciliation bill.)
The legislation now moves to the Senate where it will face additional scrutiny and could be reduced further in scope. If the Senate ultimately passes the BBB Act in a manner that changes the House-approved version, the bill would need to go back to the House for another vote before it reaches President Biden’s desk.
Passage of the BBB Act follows on the heels of the enactment of the bipartisan bill to upgrade the nation’s transportation, water, grid, broadband, and other “physical” infrastructure. President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act into law on Monday. (Washington Post, Nov. 15). The Roundtable has strongly supported bipartisan investments to modernize the nation’s physical infrastructure. (Roundtable Weekly, Nov. 12).

Progress on CRE Tax Issues

Relative to President Biden’s budget and the initial bill passed by the Ways and Means Committee, the House-passed BBB Act reflects continued progress on a number of tax issues important to real estate and prioritized by The Real Estate Roundtable. (Roundtable Weekly, Oct. 29) Critically, the current bill does not:

Limit like-kind exchanges (sec. 1031),
Increase the capital gains tax rate,
Restrict the 20% pass-through business income deduction (sec. 199A),
Tax unrealized gains at death or repeal of the step-up in basis of assets,
Change the tax treatment of carried interest, and
Restrict estate tax valuation discounts.

Roundtable Recommends Changes to Clean Energy Tax Provisions

The BBB Act’s suite of clean energy tax credits and incentives comprise the legislation’s biggest measures to fight climate change. (Roundtable Weekly, Oct. 29)
The Roundtable sent a letter to Congressional tax writers on Tuesday detailing five recommendations that aim to improve green energy tax provisions affecting real estate. The Roundtable’s letter urged changes to the BBB Act that would further the objectives to slash GHG emissions and make rapid progress toward a “net zero” economy by mid-century. (Roundtable letter, Nov. 16)
The letter’s recommendations, listed below, would increase and scale deployment of low- and zero-carbon technology in the nation’s commercial and multifamily building infrastructure.

Clarify that “thermal energy storage systems” are eligible for incentives under the Section 48 Investment Tax Credit.
Further revise the 30C tax credit to support EV chargers in the non-public, but widely used, parking lots and garages that serve America’s residential and business tenants who seek to conveniently “charge-up” while at home or at work.
Better align the BBB Act with the Biden Administration’s long-term climate strategy – by providing accelerated depreciation and other incentives for heat pumps and other components that “electrify” commercial and multifamily buildings.
Induce more “retrofits” of aging buildings by allowing taxpayers to claim the 179D deduction in the year high-efficiency equipment is placed in service.
The inclusion of Davis-Bacon and apprenticeship hiring will seriously undermine climate goals – because the high costs to comply with these labor standards will more than offset the BBB Act’s “bonus rates” for clean energy projects. Congress should not hinge the “bonus rates” on unrelated labor issues that fail to accelerate achievement of GHG reduction strategies.

Next: The Senate in December

The Senate will take up the House BBB bill in December. Democrats will need the support of moderate Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) to pass BBB legislation in the evenly divided upper chamber using budget reconciliation rules. However, Manchin recently stated he may withhold his support of the bill until next year due to rising inflation rates. (Newsweek, Nov. 16 and Axios, Nov. 10)
Additionally, House lawmakers included six pages of technical changes in their BBB bill that could help it pass the scrutiny of the Senate Parliamentarian, who can remove certain House provisions if she determines they are incompatible with Senate rules.

Congress is scheduled to return from the Thanksgiving break on Dec. 3. Treasury Secretary Janet Yellen this week warned that if lawmakers do not take action to lift the legal debt ceiling by Dec. 15, they will risk a government default on its debt obligations. (Wall Street Journal, Nov. 16)

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CRE Industry Encouraged to Participate in Energy Department’s “Better Climate Challenge” to Reduce GHG Emissions

Posted on November 4, 2021October 27, 2023 by Trey Jackson

U.S. Energy Secretary Jennifer Granholm, above, announced on Nov. 3 a “soft launch” of the multi-sector Better Climate Challenge at the COP26 international conference in Glasgow. This new Department of Energy (DOE) effort aims to recognize U.S. real estate, industrial, and other companies that voluntarily agree to slash their GHG emissions – and share their “best practices” toward achieving emissions reduction goals. (Climate Challenge Factsheet | FAQs | Informational webinar)

Program Requirements

The key element of DOE’s voluntary challenge is for companies to commit to reduce direct emissions (“scope 1”), and emissions from electricity purchases (“scope 2”), by 50% over 10 years. There is no requirement to quantify or reduce indirect “scope 3” emissions.
The 10-year window is measured from a baseline of up to five years before a company joins the program.
Commitments to reduce emissions must be across a building portfolio.
Participating companies must also pursue an efficiency target, to prioritize energy savings that will contribute toward the 50% reduction in portfolio-wide emissions over a decade.
Companies joining the program must pledge to share energy and emissions data for 10 years through EPA’s Portfolio Manager, publicly report on progress, participate in peer-to-peer exchanges, and help develop industry best practices.

Corporate Purchases of Clean Power

DOE staff discussed the new program yesterday with The Roundtable’s Sustainability Policy Advisory Committee (SPAC).
DOE explained that to reach the 50% emissions reduction target, companies can tally their long-term clean power purchase agreements (PPA) and associated renewable energy certificates (RECs). PPAs and RECs are increasingly common strategies used by CRE and other sectors to help deliver more renewable energy to the electricity grid.
Staff further explained that it does not intend for certain carbon “offsets” (such as planting trees offsite) to count towards meeting the 50% emissions reduction target.

Partnership Agreements and Public Recognition

Companies that pledge to participate in the Better Climate Challenge must sign a partnership agreement with DOE.
DOE will work with organizations as they develop organization-wide GHG emissions reduction plans and provide technical assistance with meeting corporate goals.
DOE aims for the Challenge to develop and provide “alternative pathways” that present options for companies to set and achieve climate targets.
Organizations that have already made similar commitments are encouraged to reach out to DOE to discuss how they can participate. For example, DOE will accept pre-established corporate goals with an approved 1.5° Celsius aligned science-based target, on a case-by-case basis.
Aside from Wednesday’s “soft launch,” DOE plans further public recognition for participating companies during a formal launch slated for early 2022. DOE also intends to feature companies that participate in the Challenge at its next annual Better Buildings Summit in Washington, D.C. on May 17-19, 2022.
So far, 32 organizations have publicly pledged their commitment to the Better Climate Challenge as DOE elevates outreach out to private sector companies, states, municipalities and other organizations.

Contact the Department of Energy to Participate

Those interested in participating and considering a “partnership agreement” should contact DOE:
References:
- Climate Challenge Factsheet | FAQs | Informational webinar Better Climate Challenge Partnership Agreement
- Better Climate Challenge Partnership Agreement for Energy Intensive Industries
- Better Climate Challenge Partnership Agreement for Multifamily (coming soon)

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Biden Administration Proposal Includes $555 Billion Mix of Senate and House Clean Energy Proposals

Posted on October 30, 2021October 27, 2023 by Trey Jackson

The White House’s scaled back $1.75 trillion “framework” infrastructure reconciliation bill includes a $555 billion mix of Senate and House clean energy provisions. (Axios, Oct. 29)

Why It Matters

Revamped clean energy tax incentives “form the biggest measures to fight climate change in the budget reconciliation bill.” (PoliticoPro and B-Gov, Oct. 28)

House Ways and Means Chair Richard Neal (D-MA) and Senate Finance Chairman Ron Wyden (R-OR) said yesterday they had reached agreement on the climate provisions. (PoliticoPro, Oct. 28)

The incentives largely reflect the suite of credits and deductions passed Ways and Means last month with Democratic-only support (Roundtable Weekly, Sept. 17). Senate Finance provisions favorable to CRE advanced in May (Roundtable Weekly, May 28) have also been included in the latest House package.

Clean Energy Tax Provisions

Based on the text and a section-by-section summary of the Build Back Better reconciliation bill, clean energy tax provisions of interest to the U.S. real estate sector include:
- Extension of the Section 48 Investment Tax Credit to offset some of the expenses of solar properties, combined heat and power systems, and fuel cells – with expansions to cover energy storage, dynamic glass, and “linear” generators;
- A revised tax credit for installations of EV charging stations;
- An elective “direct pay” option allowing entities with little or no tax liability to obtain a payment equal to the value of the credits they would have received if they paid taxes; and
- Reform of the 179D tax deduction geared toward incentivizing energy efficiency “retrofits” of existing commercial and multifamily buildings.

The green energy incentives, however, are subject to new labor rules that will affect taxpayers’ decisions to utilize the benefits. The Build Back Better Act does not require businesses seeking these credits or deductions to pay Davis-Bacon wages or hire registered apprentices on clean energy projects. However, the amount of the incentives can be five times greater for qualifying projects meeting these labor costs compared to those that do not.

The Roundtable’s latest Policy Issues Toolkit (“Clean Energy Tax Incentives” fact sheet, p. 25) provides more details on particular incentives and the wage/apprenticeship issues at play in reconciliation talks.

A separate climate priority of Progressive Democrats known as the Clean Electricity Performance Program (CEPP) – that would have offered incentives to power companies switching to renewable energy and fining those that “moved slowly from fossil fuels” – was dropped from the reconciliation bill at the urging of Senator Joe Manchin (D-WV). (Roll Call, Oct. 28.)

CRE’s Role

Roundtable Chair John Fish (Chairman and CEO, Suffolk), above, commented on the importance of clean energy measures affecting commercial real estate in an interview published this week with American City Business Journals.
Fish emphasized the impact that the built environment has on clean energy. He noted buildings produce 40 percent of all carbon emissions and 36 percent of all energy use. He also commented on the role of older building stock, since 75 percent of all buildings in America average 35 years old or older.

“The building world – the asset class of the buildings themselves – contributes a great deal of influence to the health of our environment. We all support energy efficiency, we all support lowering the carbon footprint. We really feel that the real estate industry, of all industries, has probably one of the biggest impacts on that conversation than anybody else. We welcome the opportunity to be at the table and to have those constructive dialogues,” Fish said. (Business Journals, Oct. 27)

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House Committees Advance Clean Energy Measures Favorable to CRE

Posted on September 16, 2021October 27, 2023 by Trey Jackson

Austin TX solar panels

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

House Energy and Commerce Committee

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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