Congress Passes Residential Energy
Efficiency Tax Credits
After five years of struggle Congress has enacted comprehensive energy
legislation. The focus of the legislation is on development of oil, gas, and
nuclear sources of energy. The energy package negotiated by the conference
committee includes measures to spur construction of new nuclear power
plants, promote ways to reduce pollution from coal and provides a boon to
farmers by requiring refiners to double the use of corn-based ethanol in
gasoline to 7.5 billion gallons a year by 2012. The legislation also
provides for: \
- Provide subsidies and tax breaks for wind, geothermal and solar
industries.
- Require new efficiency standards for commercial appliances from air
conditioners to refrigerators.
- Extend daylight saving time by a month to save energy.
- Require utilities to meet federal reliability standards for the
electric transmission grid, hoping to avoid future blackouts such as
struck in the summer of 2003.
- Eases the way for more imports of liquefied natural gas by giving
federal regulators final say over import terminals.
- Provides loan guarantees and other subsidies for clean energy
technologies and new nuclear reactors. It would authorize a $1.8 billion
program to promote clean coal technologies.
The legislation includes modest provisions for energy efficiency tax
incentives. The incentives for energy efficiency includes:
Improving the Efficiency of Existing Homes
- 10% cost based credit to homeowners to improve the energy efficiency
of existing homes. The maximum credit would be $500 ($300 for windows).
The credit will go into effect on January 1, 2006 and expire on December
31, 2009.
Energy Efficient New Homes
- Credit for builders to build energy efficient homes. The credit
applies to manufactured homes meeting a 30% reduction and other homes
meeting a 50% reduction. The credit will go into effect on January 1,
2006 and expire on December 31, 2009.
Commercial Buildings
- Deduction for commercial buildings reducing their energy by 50%. The
maximum deduction is $1.80 per square foot of the building. Deduction
will go into effect on January 1, 2006 expire on December 31, 2009.
The legislation is posted on the
Senate Energy Committee's web site. The provisions for the tax credit
for new homes is posted on page 1344. The existing homes credit's provisions
begin on page 1351. The commercial incentives start on page 1332.
Now that the legislation is passed, the first priority of RESNET is to
see that clear, effective, and cost effective procedures are adopted by the
Department of Treasury for verifying the home's performance in applying for
a tax credit. The legislation leaves the verification to the Department of
Treasury to adopt after consultation with the Department of Energy. RESNET
will be advocating for procedures that will ensure that the public's funds
are used to achieve verifible energy savings using the existing
infrastructure of building performance professionals.
Additional Resources
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