The President’s New “Better Buildings Initiative” Builds on a PPI Memo

By / 2.3.2011

President Barack Obama today announced a major new policy agenda to improve energy efficiency in commercial buildings by 20 percent by 2020, and it looks like he’s been reading PPI’s memos.

Last November, PPI released a policy memo calling on the President to support commercial retrofits as a key to powering America’s economic recovery. It called for a “targeted set of short- and long-term policies to spur jobs and drive investment in retrofitting commercial buildings”. With one in four construction workers unemployed, an aggressive plan to upgrade commercial buildings will not only create jobs, but it will also make small businesses more competitive.

The President’s new Better Buildings Initiative (announced on today’s visit to Penn State University to spotlight the school’s recently developed “Energy Innovation Hub”) is a signal of support for commercial retrofits as a driver of America’s economic recovery. The White House estimates that this will generate energy savings of $40 billion by 2020 for American businesses.

To meet this goal, the President proposed a number of policy actions. The most significant is to change the existing “Energy Efficient Commercial Building Tax Deduction” into a tax credit. Currently, the tax code provides an incentive to building owners for retrofitting buildings through a tax deduction of $1.80 per square foot.

Bipartisan support for the tax deduction already exists. Recent legislation from Senators Bingaman (D-NM) and Snowe (R-ME) on energy tax incentives would increase the deduction to $3.00 per square foot. Groups such as Rebuilding America, a broad-based coalition of labor, business, utilities, manufacturers, and policy groups, support updating the commercial building tax deduction to make it more usable for existing buildings. Rebuilding America issued a press release saluting the President’s Better Buildings Initiative.

Other elements of the Better Buildings Initiative include a ramp up of energy efficiency financing opportunities for commercial retrofits, with support from the Small Business Administration; a competitive grant program at the state and local level called “Race to Green”; an initiative to encourage CEOs and universities to commit to increase the energy efficiency of their buildings, called the “Better Buildings Challenge”; and a Building Technology Extension Program.

Jones Lang LaSalle, the nation’s second-largest commercial property manager, called the President’s proposal “exactly what’s needed to jump-start major energy and carbon reduction initiatives and to create jobs and efficiencies that enhance our global competitiveness.” (A White House fact sheet is available here.)

The President’s announcement on commercial retrofits sets the stage for renewed efforts in Congress to pass clean energy legislation. This will be part of deliberations in Congress over the President’s Budget. Over the past year, energy efficiency policy has garnered the support of Republicans and moderate Democrats alike. The Better Buildings Initiative goes a long way to outline a strategy for innovation and competitiveness in America and should be supported in the debate over the President’s Budget.