Becoming more energy-efficient is an important consideration in today's commercial real estate industry. At a time of increasing energy costs, both developers and their tenants understand that it makes economic sense to develop properties that lower their costs, thereby keeping them competitive in the marketplace. Most of the greenhouse gases that are released into the atmosphere come from coal-fired power plants during the production of electricity. Because buildings use a large percent of the nation's electricity, they are attributed responsibility for a large percentage of greenhouse gas emissions. The goal of reducing the greenhouse gas emissions attributable to commercial buildings therefore, has become a key component of the ongoing debate over energy.
In the real estate industry, local economic conditions determine the levels of efficiencies and costs that can be absorbed in a given market. Not all markets are created equal, however. Nationwide energy mandates for all building types will therefore create a disincentive to develop new properties in areas where the markets cannot absorb the increased costs. Time is needed to bring all markets to a level of sophistication where more sustainable technologies and methods become the norm and are available within a reasonable cost.
- Energy Savings and Industrial Competitiveness Act (Senate) /Energy Savings and Building Efficiency Act of 2015 (House): NAIOP has been actively involved in supporting: S. 720 (Portman/Shaheen) and H.R. 1273 (Blackburn/Schrader). These bills advance building code efficiency targets while taking into account upfront costs to developers. They include realistic payback schedules for increased energy improvements.
- Energy Efficient Commercial Building Tax Deduction: The federal incentive was renewed at the end of 2015 as part of the tax bill known as the PATH Act. Rather than continuing to pass short term extensions of this incentive, we believe that it should be enshrined in the tax code, making the incentive permanent. Additionally, the deduction amount should be increased and retooled to make it more usable for retrofits.
- Federal Rebates: Encouraging residential building owners to purchase energy efficiency appliances with federal rebates has been very successful. A similar approach is needed for energy efficient equipment installed in commercial buildings.
In the Senate, Senators Rob Portman (R-Ohio) and Jeanne Shaheen (D-N.H.) have been working on building energy efficiency legislation for several years, and introduced legislation this Congress known as the Energy Savings and Industrial Competitiveness Act. Their bipartisan bill was passed by the Senate Energy and Natural Resources Committee by a favorable vote of 19-3. The bill was then folded into a broader energy bill, S. 2012, which passed the Senate with bi-partisan support.
In the House of Representatives, the Energy Savings and Building Efficiency Act, was introduced by Congresswoman Marsha Blackburn (R-TN) and Congressman Kurt Schrader (D-OR). The House Energy and Commerce Committee also included the bill into a larger energy measure, H.R. 8, which was passed by the House in December of 2015.