Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. President, I rise to join Senators CARDIN and SCHATZ in introducing the Energy Efficiency Tax Incentives Act.

This bill has been drafted cooperatively, and my colleagues have been especially accommodating of changes requested by California's experts. I thank them for their hard work on this bill.

This legislation revises and extends energy efficiency tax incentives for homes, commercial buildings, and industrial facilities.

The bill continues the effort for energy efficiency improvements that I began with Senator Bob Smith of New Hampshire in 2001. I was proud to pass that legislation with Senator Snowe in 2005.

The Energy Efficiency Tax Incentives Act builds on that law by reforming tax code incentives to implement a performance-based regime in which incentives grow larger as energy efficiency increases.

The policy improvements in this bill were recommended by energy efficiency experts.

This bill establishes energy and water efficiency incentives for commercial buildings and industrial facilities, about which Senator Cardin and Senator Schatz have focused their remarks.

I would like to focus on a different provision in the bill: tax credits for home renovations that will increase energy efficiency of homes by at least 20 percent.

The tax credit would increase in size with every 5 percent of additional energy efficiency improvement achieved.

Homeowners who improve the efficiency of their home by more than 50 percent will qualify for a maximum credit of $5,000.

In addition to increased energy efficiency, this bill helps address the continued double digit unemployment in the construction sector.

It is clear that we need policies that will help put the construction industry back to work, but with 10 percent of homes still vacant, any stimulation of new-home construction could make the situation worse.

That is why this bill is so creative--it stimulates the construction industry by incentivizing the renovation of existing homes.

This bill creates tax incentives for energy efficiency home renovation based on the energy performance of the home, rather than just the cost of the equipment.

Current policy allows homeowners to claim credits for the purchase of energy efficient insulation, windows, doors, heaters, air conditioners and water heaters. That approach is expensive, costing about $2 billion per year.

By restructuring the credit to apply to whole-home energy renovations that reward energy efficiency performance, this proposal has the potential to increase effectiveness while substantially lowering the cost to the U.S. Treasury.

This legislation also includes provisions to promote effectiveness and prevent abuse. The contractor carrying out the work must sign an affidavit certifying the work was done, as well as submit photographs of the work. Additionally, the contractor must use certified, computer-based energy efficiency measurement tools.

The credit would be limited to renovations of primary residences that do not increase the size of the home. The credit would be capped at 30 percent of the cost of renovation in order to prevent homeowners from making large claims for relatively inexpensive renovations.

Since it is a tax credit, all claims would be subject to IRS audits.

In addition to incentivizing energy efficiency improvements, the bill also creates an Industrial Process Water Use Project Credit.

This is a technology-neutral, performance-based tax credit for implementing efficiency measures to reduce the use of water in the manufacturing sector.

In a state like California, which frequently faces very dry conditions, rewarding water conservation and efficiency measures is beneficial.

Much like the energy provisions, the bill increases the tax incentives as water savings grow.

The incentive begins with a 10 percent tax credit for implementing efficiency measures that achieve at least 25 percent reduction in water use. The tax credit then increases by 10 percent for each 25 percent additional water savings, with a 30 percent maximum.

This bill is important because it will help incentivize the construction industry to upgrade buildings across the country.

The 113 million homes in America account for 22 percent of the U.S. energy use, according to the Department of Energy. And 4.8 million commercial and 350,000 industrial facilities account for an additional 18 percent.

These buildings also account for 27 percent of carbon dioxide emissions in the United States, according to the Energy Information Administration.

Experts and scientists believe improving energy efficiency is one of the most cost-effective ways to combat climate change and reduce greenhouse gas emissions.

A recent McKinsey & Co. study concluded that maximizing energy efficiency for homes and commercial buildings could help reduce U.S. energy consumption by 23 percent by 2020.

This is a jobs bill that also rewards energy and water efficiency renovations. It will lead to more jobs in the construction sector, an increase in energy efficiency, a reduction in pollution, and an expansion of the market for efficient technology and products.

This bill is supported by the Alliance to Save Energy, Efficiency First, the American Council for an Energy Efficient Economy, and the Natural Resource Defense Council.

This sort of investment--putting Americans back to work to upgrade the country's infrastructure--is the type of legislation on which Congress should be spending more time.

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