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By Michele Madia, Director of Sustainability Financing & Strategy, Second Nature

(This article appears in the November, 2012 issue of The ACUPCC Implementer)

No matter what the outcome of the presidential election, Congress will undoubtedly consider comprehensive tax reform in the New Year. Second Nature, the American College & University Presidents’ Climate Commitment (ACUPCC) and the National Association of College & University Business Officers (NACUBO) are presenting policy options for changes in tax policy and federal grant programs that would allow colleges and universities to increase operational efficiencies, reduce long-term energy expenses and ultimately contribute to administrative efforts to contain costs.

The report, Higher Education: Leading the Nation to a Safe and Secure Energy Future was released at the ACUPCC Climate

Luther College generates one-third of the electrical power it consumes with a wind generator sited on the bluff overlooking the campus and city.
Photo: Erik Hageness

Leadership Summit in Washington, DC this past summer, explores how the federal government can develop and enhance clean energy incentives and investments specifically for colleges and universities. To publicize the report and proposals, Second Nature hosted a press briefing with higher education reporters. Several college presidents participated in the event with media representatives from the Chronicle of Higher Education and the American Association of Community Colleges (AACC). Stories about the report appeared in the Chronicle of Higher Education, ClimateWire, and in AACC’s Community College Times.

In early October, Second Nature and NACUBO hosted a meeting with representatives from government relations staff at higher education associations (HEA) and from individual institutions to educate them about the shared effort. David Hales, in his first visit to Washington DC as Second Nature’s new president, participated in the meeting and had the opportunity to connect with key staff from the presidential associations.  The goals for the meeting were to:

• Educate association colleagues about Second Nature’s work
• Engage the higher education associations in dialog about the strategic importance of energy issues (HEAs are primarily focused on student aid, access, and research funding)
• Enlist additional volunteers to participate in meetings going forward

Participants included representatives from: Association of American Universities (AAU), Association of Public Land-grant Universities (APLU), University of California, Irvine, University of Colorado, Ball State University, Portland State University, Michigan State University, University of Washington, University of Pennsylvania, and the University of California Office of the President.

Technical Correction to the Energy Efficient Commercial Buildings Deduction (Section 179D)

Second Nature has been involved in another effort to advocate for public policy initiatives that are consistent with the ACUPCC mission.  We have identified a current legislative issue that would benefit all higher education institutions and all nonprofits that may be considering new construction or building retrofits that generate energy savings.

The specific issue described here in more detail involves a federal tax deduction for energy efficiency projects. Currently nonprofits, including independent colleges and universities are excluded from benefiting from this deduction.  Supporters of an amendment extending the deduction to nonprofits have indicated that letters of support from influential and respected voices addressed to targeted members of Congress would be helpful in getting the amendment added to the “tax extenders bill” during the lame duck session of Congress in November.

Second Nature took action and identified eight signatory institutions in key legislative districts, and requested that presidents send a letter of support to their member of Congress.

Since 2005, there has been a deduction for buildings that meet a certain threshold of energy savings (new construction or renovation).  This is a technology neutral tax incentive that encourages energy conservation by tying the value of the deduction to the actual energy savings generated by the building once it is completed. The deduction may be up to $1.80 per square foot, with qualifying energy efficient improvements in lighting systems, heating, cooling, ventilation, hot water systems, and the building envelope.

To help ensure that governmental owners get the most efficient systems yielding long-term operating savings, Section 179D permits a government building owner (including public institutions) to allocate the 179D deduction to one or more persons “primarily responsible for designing the property,” – this party can include architects, engineers, contractors, environmental consultants, or energy services providers.  The statute does not now allow nongovernmental nonprofits to allocate this deduction, although there is no legislative history indicating that this is intentional.

The benefit to the overall economy from permitting major sectors like higher education and hospitals to allocate the Sec. 179D tax deduction for energy efficiency construction and retrofit projects to the designers, engineers, construction firms, and architects involved with such projects will be considerable. Being able to include such a deduction in building construction or retrofit RFPs should lead to lower bids. Institutions would be incentivizing architects, engineers, and contractors to push the envelope on available energy savings, resulting in lower operating costs for years to come.  There is bipartisan support for the current law because of the savings it can generate and federal agencies have been encouraged to maximize their use of the allocation authority. Extending this benefit to higher education and to hospitals would help to save money in this capital and budget constrained economy, maximize the return on energy efficiency investments, and support the commitments made by ACUPCC institutions to help eliminate operational greenhouse gas emissions.

Second Nature will keep the network informed about both the technical correction to 179D, and about our national policy strategy more broadly. To get involved, or learn more, contact Michele Madia, Director, Sustainability Finance & Strategymmadia@secondnature.org.