US Economic Recovery: The Secret to Recovery is a Green Tax Policy


At a time when job creation and environmental policy are at the forefront of political discourse, there is a perfect example of successful bi-partisan efforts to advance the American energy economy: the Energy Efficient Commercial Buildings Tax Deduction under the Energy Policy Act legislation. Unfortunately, this policy is set to expire in 2013. If the legislation does not get renewed, it may signal the fulfillment of Mayan 2012 end-of-world prophecy – okay maybe not quite that dire, but it will definitely be a huge step back from the kind of smart tax policy which produces real results.

The Energy Policy Act (EPAct) is a bill that was passed by Congress and George W. Bush in 2005. Under the EPAct §179D tax deduction, commercial building owners receive a tax deduction for investments in energy efficiency infrastructure, including HVAC, lighting, and building envelope upgrades. At present, the EPAct §179D legislation offers a tax deduction of up to $1.80/sq. ft. Under the new proposal, this credit would be expanded to $3/sq. ft. until December 2016, with non-profits being able to assign credit to third parties for their building renovations. With over $130 billion of energy savings going unrealized every year, and with the U.S. falling behind many of our competitors – Germany, UK, France, China, and Japan – in the business of energy efficiency, renewing this legislation could not be more vital to American environmental and economic growth.   

Going green creates jobs that earn Americans green, hard cash. According to the Political Economy Research Institute at the University of Massachusetts, $1 million spent in the natural gas or coal industries yields less than 10 jobs per investment. By comparison, building retrofits, like those incentivized by the EPAct §179D tax deduction, yield on average 17 jobs per $1 million investment. At SIS, we have experienced this job growth firsthand. When we launched, we were a three-person operation. At present, we have grown to a team of six full-time and five part-time staff.

Today, I was sitting in coffee shop in lower Manhattan, which only a few weeks ago was powerless and unusable thanks to the Sandy-apocalypse. Mayan end-of-world prophecies and global warming aside, there is one reality that is hard to ignore – the American economy cannot prosper without a strong, vibrant business sector, and our businesses need smart, efficient tax policies to help them thrive. The EPAct §179D legislation is a perfect example of a tax policy that has a direct impact on American economic growth. It would be a huge setback to American economic and environmental growth to not renew and expand it.