September 11, 2019
Clean Energy Economy Minnesota and several member companies recently reached out to Congress, noting policies that will impact Minnesota’s clean energy business community. CEEM supports the Energy-Efficient Commercial Buildings Tax Deduction (commonly referred to as Section 179D). This tax deduction is important for ensuring Minnesota’s businesses can make stable investments in energy efficiency, while also continuing to drive job growth in the sector. Companies supporting the policy include Ameresco, Ever-Green Energy, LHB Corporation, Pace Loan Group, 75F, Werner Electric, and Willdan. (See full letter to Minnesota's Congressional delegation HERE)
The Section 179D deduction originated with the Energy Policy Act of 2005. The enhanced deduction applies to commercial building owners offering a tax deduction of up to $1.80 per square foot for implementing energy efficiency measures in new or existing buildings. Specifically, the deduction is for improvements to a commercial building’s lighting systems, HVAC systems, or building envelope. In the case of a publicly-owned building, the deduction can be allocated to the primary designer, such as an engineering, contracting, or architecture firm.
This deduction has proved highly useful to clean energy and energy efficiency businesses across the state. Not only does it reduce businesses’ tax liability, it helps entice potential clients to move forward with smart energy efficient enhancements -- all while supporting the creation of more energy efficient buildings and growing jobs.
CEEM supports renewal of Section 179D, which is being discussed by Congress this summer. Despite its widespread support among small business owners, the Section 179D deduction continues to be temporary, being repeatedly renewed after lapsing. The deduction most recently expired on December 31, 2017. The lack of certainty surrounding Section 179D stifles investment in energy waste reduction for Minnesota’s buildings. More simply, the uncertainty is bad for clean energy business.
The argument for encouraging building owners to choose energy efficient options is a smart economic decision – and one that benefits all Minnesotans. Efficiency is cheap: the cost to save one kilowatt hour is about 2 cents; compare that to the cost to buy a kilowatt of electricity, which averages 8 cents. In addition, the energy efficiency sector employs an impressive 46,000 Minnesotans.
Minnesota’s clean energy businesses thrive on certainty, and that is why CEEM asks Congressional action. We asked that our Minnesota elected officials support a multi-year extension of the Section 179D provision through at least 2020, and we would strongly support extending it beyond 2020.
For more information, contact Benjamin Stafford, CEEM’s Director of Policy & Public Affairs firstname.lastname@example.org