Tag: Energy Policy

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

Posted on by Trey Jackson

Capitol reflective glass morning

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

San Francisco buildings

  • 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

Alternative Energy source CRE

  • 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.
  1. Clarify that “thermal energy storage systems” are eligible for incentives under the Section 48 Investment Tax Credit.
  2. 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.
  3. 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.
  4. Induce more “retrofits” of aging buildings by allowing taxpayers to claim the 179D deduction in the year high-efficiency equipment is placed in service.
  5. 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

U.S. Capitol evening

  • 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) 

#  #  # 

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

Posted on by Trey Jackson

U.S. Energy Secretary Jennifer Granholm

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

Better Climate Challenge logo

  • 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 

Modern buildings and American flag

#  #  # 

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

Posted on by Trey Jackson

Capitol-Dome-night-flag

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 

Solar-panel-installation-3-men

  • 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 

John Fish 2021 Suffolk

  • 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)

#  #  #

House Committees Advance Clean Energy Measures Favorable to CRE

Posted on 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.

#  #  # 

Senate Committee Advances $100 Billion+ Energy Bill With Provisions Affecting Commercial Real Estate

Posted on by Trey Jackson

Senate Energy Committee

The Senate Energy Committee this week passed a bill to authorize more than $100 billion in spending on U.S. energy infrastructure with provisions affecting commercial real estate. The bill may be folded into a larger bipartisan infrastructure package emerging on Capitol Hill. (CQ and Reuters, July 14) 

A Bipartisan Influence 

  • The Energy Infrastructure Act, introduced by Committee Chairman Joe Manchin (D-WV), below, drew the support of all 10 Democrats and three Republicans on the panel. Manchin noted that the committee’s vote “is another critical step toward finalizing our bipartisan infrastructure package, and an important reminder that we can find sensible solutions to difficult problems when we put partisanship aside and work together.” (Manchin news release and committee meeting video, July 14) 

CRE Impact 

Sen. Joe Manchin (D-WV)

  • The bill includes provisions that would create an avenue for Congressional oversight to improve the Commercial Building Energy Consumption Survey (CBECS) – the key data set collected by the federal government on the basic characteristics of U.S. commercial buildings and how much energy they consume. 
    • Improving the quality and integrity of CBECS data has long been a priority of The Roundtable’s Sustainability Policy Advisory Committee (SPAC) chaired by Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust) , and Vice-Chaired by Dan Egan (Vornado Realty Trust) and Ben Myers (Boston Properties). 
    • “Reliable data from the federal government is crucial to help building owners do their part to address climate change,” said Roundtable President and CEO, Jeffrey DeBoer. “We applaud Chairman Manchin’s efforts through the Energy Infrastructure Act to modernize CBECS data so it reflects the substantial resources our members commit to optimize energy efficiency and reduce greenhouse gas emissions from the built environment.” 
  • CBECS is managed by the U.S. Energy Information Administration (EIA). It provides the foundational data set used by the Environmental Protection Agency (EPA) to certify 1-100 ENERGY STAR scores that “label” top performing buildings for lower energy use and greenhouse gas emissions compared to typical buildings. 
    • According to EPA, 5.6 billion square feet of floor space are ENERGY STAR rated, and these certified assets command a premium up to 16% for sales prices and rental rates. 
  • Despite the critical importance of EIA’s CBECS data to EPA’s ENERGY STAR program, there is currently no requirement for the agencies to coordinate on how they use or verify data. Manchin’s bill would change this. 
    • It would require the agencies to submit to Congress an “information sharing agreement” that explains how EPA’s own vaster and more current set of building data (collected through its Portfolio Manager “energy benchmarking” tool) can be used to supplement CBECS data. 
  • Manchin’s bill would also require EIA to report to Congress on how it might publish CBECS data every three years – on a faster track than EIA’s current six-to-seven year survey cycle, which results in government and private sector reliance on outdated building information in rapidly evolving energy markets. 
    • The bill would also require the agencies to “cross-check” buildings’ energy consumption in different data sets to improve statistical reliability, and take steps to ensure that larger buildings (greater than 250,000 square feet) are fully represented in the federal CBECS set.   

Investments in the Electric Grid, Code Implementation 

Electric towers

  • Other provisions in the Energy Infrastructure Act would:
    • Provide federal grants to States and other entities to harden the electric grid and improve its resiliency to natural and cyber threats;
    • Provide States with money to establish revolving loan funds for building audits and retrofit projects;
    • Direct the Energy Department and the Federal Energy Regulatory Commission (FERC) to develop model guidance for combined heat and power (CHP) systems to provide “backup” or “standby” power to the electric grid;  
    • Create an Energy Department grant program for code agencies, building associations, and other entities to improve implementation and compliance with building energy codes; and
    • Trigger Davis-Bacon “prevailing wage” requirements for any projects or programs receiving federal dollars.  

 Language from the Senate Energy Committee’s bill might ultimately be incorporated into a larger infrastructure package expected to encompass transportation, electric vehicles, broadband, water, and sewer systems. [See Infrastructure story above]   

#  #  #

Congress Continues to Focus on Climate-Related Legislation

Posted on by Trey Jackson

Legislators in both the Senate and House this week continued to work on stand-alone bills designed to lower U.S. energy consumption and reduce the risks posed by GHG emissions, in tandem with the administration’s emphasis on climate change and building “retrofits” through the comprehensive American Jobs Plan proposal. (Roundtable Weekly, May 28 and June 11)

Senate: The INSULATE Buildings Act

  • A bipartisan bill introduced by Sens. Joe Manchin (D-WV) and Lisa Murkowski (R-AK) on June 15 would seek to improve the energy efficiency of buildings and homes by providing financial resources to state-level energy agencies.
  • The INSULATE Buildings Act (summary) would establish a new U.S. Department of Energy “revolving loan program.” State agencies would then use these federal proceeds to distribute loans and grants to eligible businesses and homeowners to upgrade and retrofit to commercial and residential buildings.
  • The program would also seek to provide states that have the poorest efficiency in their commercial and residential building stock with additional aid.  States could also use up to 25% of their capitalization grant to provide direct grants to small businesses and low-income homeowners.
  • Manchin, who chairs the Senate Energy and Natural Resources Committee, remarked that his INSULATE Buildings Act “provides a significant opportunity to improve energy efficiency and reduce energy consumption in buildings.” (News release, June 15)

Davis-Bacon Wage Requirements

  • Both the Manchin-Murkowski bill and a recent Senate Finance Committee energy tax incentives bill would require construction projects receiving federal financial support through these measures to comply with “Davis-Bacon” prevailing wage standards. (Roundtable Weekly, May 28)
  • The Finance Committee, chaired by Ron Wyden (D-OR), in May advanced an improved energy efficiency tax deduction for commercial buildings (Section 179D) that would make the incentive more usable for “retrofits” of older buildings, multifamily structures, and REITs. (Clean Energy for America Act (S. 1298), mark-up video and supporting documents)
  • A May 26 Roundtable letter opposed new prevailing wage mandates proposed by the Senate committee bill. The letter warned that the excessive costs from Davis-Bacon compliance will greatly exceed the amount of any tax deduction that Section 179D might provide to incentivize an energy efficient construction project.

House: Climate Risk Disclosures

Securities and Exchange Commission (SEC) seal
  •  The House on June 16 passed the Corporate Governance Improvement and Investor Protection Act (H.R. 1187) on a partisan vote, which incorporated the texts of several bills with support from the White House.
  • Among its provisions, the Act would require companies to disclose greenhouse gas emissions and describe their climate risk mitigation strategies. It would also direct the Securities and Exchange Commission (SEC) to issue specific rules within two years that address the disclosures.  (House Financial Services Committee summary and section-by-section overview)
  • At the regulatory level, The Real Estate Roundtable on June 9 commented to the SEC on the unique challenges facing commercial real estate businesses if the Commission eventually requires corporate issuers to report on climate-related financial risks. (Roundtable Weekly, June 11).
  • The bill would also require disclosures to the SEC on matters relating to companies’ political action contributions, lobbying efforts, executive compensation and pay raises, and offshore tax havens.

The measure barely passed the House with only Democrats showing support on a 215-214 vote, indicating that the prospects for passage in the Senate are slim.

#  #  #

Senate Finance Committee Advances Energy Tax Bill with Enhanced Incentive for Energy Efficient Building “Retrofits”

Posted on by Trey Jackson

The Senate Finance Committee on Wednesday advanced an improved energy efficiency tax deduction for commercial buildings (Section 179D) that would make the incentive more usable for “retrofits” of older buildings, multifamily structures, and REITs. (Clean Energy for America Act (S. 1298), mark-up video and supporting documents)

 Section 179D & CRE 

  • The modified bill introduced by Chairman Ron Wyden (D-OR), above,  included amendments originally proposed by Sen. Ben Cardin (D-MD) to improve Section 179D. Overall, the bill would replace a patchwork of more than 40 energy tax policies with incentives for commercial and residential energy efficiency, clean electricity, and clean transportation fuels, and eliminate fossil fuel subsidies. 
  • The Section 179D enhancements would allow:
    • A retrofit project tax deduction for efficiency investments that lower an existing building’s energy consumption from a “pre-retrofit” baseline measured through EPA’s Portfolio Manager benchmarking tool;
    • All multifamily buildings to qualify for the Section 179D incentive;
    • REITs to benefit from the incentive by allowing the amount of the 179D tax deduction to reduce earnings and profits (“E&P”) in the year that energy efficient equipment is placed in service. 
       
  • The legislation also includes new rules requiring that taxpayers claiming Section 179D or other tax benefits in the bill comply with the Department of Labor’s prevailing wage standards and use qualified apprentices for at least 15 percent of the labor hours associated with any construction, alteration, or repair work on the project.  

Roundtable Recommendations

Davis-Bacon Prevailing Wage Concerns

  • The  Roundtable’s letter opposed new prevailing wage mandates proposed by the bill. The Roundtable warned that the excessive costs from Davis-Bacon compliance will greatly exceed the amount of any tax deduction that Section 179D might provide to incentivize an energy efficient construction project.
  • “Davis-Bacon has never been applied simply because the Internal Revenue Code provides a deduction to lower a private entity’s taxable income,” the letter stated. “The Roundtable recommends that the Clean Energy for America Act avoid unchartered territory that would transform the Internal Revenue Code into a ‘Davis-Bacon Related Act.’”
  • Committee Ranking Member Mike Crapo (R-ID), above, said, “I cannot support attaching labor requirements to energy tax policy. Linking labor policy to energy-related tax credits is unprecedented, and I have concerns not only about the policy, but also about the dangerous precedent it sets for amending the tax code.” 
  • After the committee voted 14-14 along party lines to advance the $260 billion energy tax bill, Chairman Wyden said he would place the bill on the Senate calendar. (CQ, May 26).
  • The bill’s prospects in the full Senate are uncertain, yet specific elements within the bill could be incorporated into a larger economic package proposed by President Biden. Wyden has not said whether he will work to roll the measure into the president’s infrastructure plans. (BGov, May 26)

Energy and tax policies affecting commercial real estate will be a focus of discussions during The Roundtable’s June 15 all-member Annual Meeting – and during its June 16 Tax Policy Advisory Committee (TPAC) and Sustainability Policy Advisory Committee (SPAC) Meetings.

#  #  #

Biden Administration Officials Hold Summit with CRE Leaders to “Decarbonize” Buildings

Posted on by Trey Jackson

Better Buildings webcast with Sara Neff speaking

The White House convened a roundtable discussion on Monday with CRE industry leaders and other stakeholders to discuss opportunities and obstacles to “decarbonize” U.S. buildings and create jobs on energy efficient construction and retrofit projects. (“Accelerating Building Decarbonization,” Department of Energy / YouTube video) 

Government and Industry Dialogue 

  • The event aimed to catalyze cooperation across government, real estate, manufacturing, and union participants as part of President Biden’s American Jobs Plan, which has a goal to build and retrofit two million homes and commercial buildings.
  • According to a White House Fact Sheet, its recommended federal investments in building energy efficiency and electrification “will create new domestic manufacturing opportunities for electric heating and cooling technology, invest in research and development to spur smart building advances, and forge collaborations that will enable buildings to be powered by clean electricity.”
     
  • White House National Climate Policy Advisor Gina McCarthy led the “Better Buildings Summit,” which also included Department of Energy (DOE) Secretary Jennifer Granholm; Environmental Protection Agency (EPA) Administrator Michael Regan; General Services Administration (GSA) Acting Administrator Katy Kale; and White House Council on Environmental Quality Chair Brenda Mallory. (YouTube video) 
  • Henry Chamberlain, president and COO of the Building Owners and Managers Association (BOMA) International, participated in the event. The White House also invited five members of The Roundtable’s Sustainability Policy Advisory Committee (SPAC) to participate:   
    • Darien Crimmin, WinnDevelopment
    • Dan Egan, Vornado Realty Trust (SPAC vice-chair)
    • Ben Myers, Boston Properties, Inc.
    • Sara Neff, Kilroy Realty Corp.
    • Dana Schneider, Empire State Realty Trust, Inc.

New Programs 

Better Buildings logo

  • The webinar revealed that GSA will act as a proving ground to adopt carbon neutral strategies in the federal building stock – and develop “performance standards” for federal buildings with metrics and targets to reach their goals for reducing emissions.
  • The White House’s Brenda Mallory announced during the event that a series of “stakeholder roundtables” will be held by the Administration to gain perspectives from industry experts on how to modernize buildings.
  • EPA Administrator Regan also announced new programs affecting CRE, along with several other initiatives impacting the residential sector, including:

Zero-Carbon Building Recognition

EPA is developing criteria for a new zero-carbon commercial building recognition award. This new program aims to encourage early adoption of efficiency, electrification, green power and renewable thermal certificates in buildings, and to complement building performance standards and ENERGY STAR certification for top performing energy efficient buildings. 

Greenhouse Gas Emissions Calculator Tool for Commercial Buildings

EPA will launch a new tool linked to the ENERGY STAR Portfolio Manager benchmarking tool used by over 25% of the commercial building space in the country. The new calculator will support scenario-building and estimating the impacts of electrification and renewable energy at the building and portfolio level by enabling the use of customized emissions factors to estimate future emissions associated with building energy use. 

  • Separately, DOE Secretary Granholm testified yesterday before the House Energy and Commerce Subcommittee on Energy on her department’s $46.2 billion 2022 FY budget request. Granholm addressed the Administration’s infrastructure plan and urged Congress to advance clean energy technologies. (Granholm testimony, May 19)
  • President Biden yesterday issued an Executive Order directing his Administration to create a strategy on quantifying climate change risks for both public and private financial assets. Treasury Secretary Janet Yellen, who leads the multi-agency Financial Stability Oversight Council, will oversee development of the federal report on information sharing requirements of the climate-related financial risk data. (White House Fact Sheet, May 20) 

The Roundtable’s SPAC will focus on the impact of the Biden Administration’s and congressional efforts to reduce carbon emissions in buildings during its June 16 meeting, held in conjunction with the organization’s Annual Meeting (remote).

#  #  # 

Congress Reviews Biden’s Multitrillion Infrastructure Proposals

Posted on by Trey Jackson

President Biden Speaks at Amtrak Anniversary

Capitol Hill continued to assess President Biden’s “physical” and “social” infrastructure plans this week as Democrats considered how to advance the Administration’s proposals in a narrowly divided Congress. (BGov, May 4)  Photo: President Biden on April 30th discussed his infrastructure proposals during Amtrak’s 50th anniversary.

Infrastructure Negotiations 

  • Biden’s infrastructure proposals include last week’s $1.8 trillion American Families Plan, composed mainly of social spending and tax hikes on wealthy individuals – and his $2.3 trillion American Jobs Plan unveiled in March. (Roundtable Weekly, April 30 and Wall Street Journal, April 29).  
  • Senate Minority Leader Mitch McConnell (R-KY) on Monday said Republicans are open to funding projects that fit into a much narrower definition of infrastructure, for a much smaller cost, and funded by unspecified fees rather than tax increases. (AP, May 3)
  • “We’re open to doing a roughly $600 billion package, which deals with what all of us agree is infrastructure and to talk about how to pay for that in any way other than reopening the 2017 tax reform bill,” McConnell said.
  • White House Press Secretary Jen Psaki on May 5 said Biden plans to meet with key policymakers on his proposals next week, including Sen. Shelley Moore Capito (R-WV), ranking member on the Environment and Public Works Committee. “The president believes Congress can and should move forward with multiple policies at the same time. And, certainly, that is what is happening on Capitol Hill.” Psaki said. (White House press briefing, May 5 and Transport Topics, May 6)
  • CNBC reported on May 6 how residential and commercial real estate could be affected by Biden’s tax proposals, which would raise capital gains taxes, tax unrealized gains at death with an exception for family-owned businesses, and restrict the use of Section 1031 like-kind exchanges.
  • The Wall Street Journal on May 6 also reported how Biden’s proposal to restrict 1031 exchanges would add another burden on farmers, who have used the provision to relocate operations, diversify crops, and consolidate land holdings. 

Congressional Legislation

Capitol Building with sun

  • This week, Congress considered legislation that would impact issues of interest to commercial real estate, including:
  • The House Energy Committee addressed the CLEAN Future Act (H.R.1512) during a hearing focused on decarbonizing the transportation sector.  H.R. 1512 is a sprawling bill aimed at achieving net-zero greenhouse gas emissions by 2050 that contains provisions affecting building construction, operations, and ESG reporting. (Politico, March 3 and CQ News, Reuters, March 2)
  • A May 4 House Financial Services Subcommittee hearing addressed the National Flood Insurance Program (NFIP). A discussion draft released before the hearing would reauthorize the NFIP for five years, enact reforms to place the program on sound financial footing, institute a cap on premium increases of 9% per year, and forgive over $20 billion in NFIP debt. (Committee background memorandum)
  • In the Senate, legislation is expected to be reintroduced in the next few weeks that would encourage the construction of more energy-efficient new homes and commercial buildings through voluntary “model” building codes. Sens. Jeanne Shaheen (D-NH) and Rob Portman (R-OH) issued a May 3 news release on their plans to reintroduce their energy efficiency legislation. 

House Appropriations Chair Rosa DeLauro (D-CT) on May 6 said she plans to mark up fiscal 2022 spending bills in June, before expected floor votes in July.  Lawmakers would have to finish their spending bills by Sept. 30, when the government’s fiscal year ends, or pass a stopgap measure to avert a shutdown of government agencies. (BGov, May 6)

 #  #  #

Senate Hearings Focus on Clean Energy and Tax Policy, Climate Bank

Posted on by Trey Jackson

Senate Finance Committee Chairman Ron Wyden (D-OR)

Senate hearings this week indicate that clean energy financing and tax policies considered in the current Congress might significantly affect commercial real estate. (Tax Notes, April 29)

Senate Finance Focus

  • Senate Finance Committee Chairman Ron Wyden (D-OR), photo above, opened an April 27 hearing by noting how President Biden’s goal of cutting carbon emissions in half by 2030 is driving clean energy policy. Wyden stated, “The reality is, a debate on energy and transportation is largely a debate on tax policy. That puts this committee in the driver’s seat when it comes to job-creating legislation that addresses head-on the existential challenge of the climate crisis.”
  • Sen Wyden also remarked about legislation he introduced last week – the Clean Energy for America Act, which would revamp tax incentives directed at buildings, electricity and transportation. Among other things, the bill would reform the 179D deduction for energy efficient commercial and multifamily buildings – with the value of the incentive increasing as more energy is conserved. (Text of the legislation, one-page summary of the bill and a section-by-section summary.)
  • Committee Ranking Member Sen. Mike Crapo during his opening remarks noted draft legislation that he unveiled the day before with committee member Sheldon Whitehouse (D-RI) – the Energy Sector Innovation Credit (ESIC) Act. ESIC is an incentive that would “target tax credits for innovative clean energy technologies,” Crapo said. (SFC news release).

E-QUIP Accelerated Depreciation

HVAC equipment

  • Separately, a broad coalition of environmental, manufacturing, and real estate groups led by The Roundtable supports the E-QUIP Act (H.R. 2346), which proposes “accelerated depreciation” for high-performance equipment installed in commercial and multifamily buildings. The coalition is urging policymakers to include this measure as part of any “green tax” package that may be folded into larger infrastructure spending legislation. (Roundtable Weekly, April 2)
  • Roundtable President and CEO Jeffrey DeBoer emphasized an important distinction between the energy incentives affecting CRE. “All building owners are intensely focused on operations and technologies to reduce energy consumption. Yet the policy discussions in Washington frequently don’t reflect the reality of these efforts to make commercial real estate properties more sustainable. It is retrofitting the existing building stock, not new construction, where energy savings and policy incentives are most challenging.” DeBoer said.
  • He added, “The 179D incentive fails to reflect the diverse vintage and tenant base in buildings. The E-QUIP incentive accommodates existing buildings by targeting the addition of high-performance, energy saving components. Combining the two incentives would make most sense.” 

National Climate Bank

Senator Chris Val Hollen (D-MD)

  • The Senate Environment and Public Works Climate Subcommittee on April 27 held a “Legislative Hearing on S.283, National Climate Bank Act” focused on how a national climate bank, also known as an “energy accelerator,” would invest in renewable energy technology.
  • Sen. Chris Van Hollen (D-MD), photo above, co-author of S. 283 with Subcommittee Chairman Sen. Ed Markey (D-MA), testified at the hearing, “… we need a National Clean Energy Accelerator … so we can turbocharge private investment, fortify our energy grid, and create millions of clean energy jobs – including in those communities where fossil fuel plants have closed.”
  • Van Hollen’s legislation is supported conceptually by President Biden’s American Jobs Plan, which recommends a $27 billion “accelerator” financing platform to mobilize private investment into building retrofits and other clean energy projects.

  • White House National Economic Council Director Brian Deese recently discussed the creation of a climate bank in an interview with Roundtable President and CEO, Jeffrey DeBoer for The Roundtable’s April 20 Spring Meeting. (Roundtable Weekly, April 23).

Additionally, the White House on April 27 announced policy actions to advance the expansion and modernization of the energy grid. National Climate Advisor Gina McCarthy noted, “After the Texas transmission debacle this winter, no one can doubt the need to invest in our electric grid. The steps that the Departments of Energy and Transportation are taking today, when combined with the grid investments outlined in the American Jobs Plan, will turbocharge the building of major new electricity transmission lines that will generate new jobs and power our economy for years to come.”

#  #  #