Posted by Hannah Feingold on 11.03.21

From USGBC: The budget reconciliation bill Congress is debating offers climate-friendly opportunities.

Democrats are starting to show their cards for addressing climate change with the tax and spending legislation—referred to as the “budget reconciliation” bill— that’s moving through the U.S. Congress. In a series of committee texts released in recent days, the House of Representatives proposed a host of investments and incentives for upgrading homes and buildings alongside dozens of proposals promoting electric vehicles, energy storage, renewable power and a more dynamic electric grid.

It’s probably the most comprehensive climate proposal we’ve seen get this far in Washington, D.C., and Democratic leaders deserve a lot of credit for their approach thus far, particularly on tax policy and the attention to public facilities and home weatherization. However, lost opportunities in the bill may raise concern for those working in the buildings sector. In addition, with more members vocalizing opposition to the topline spending level of $3.5 trillion, these bills are likely to be scaled back in the coming weeks, so continued engagement and advocacy is critical to protect the building investments.

Moving in the right direction

The Energy and Commerce Committee’s bill would allocate $17.5 billion for building upgrades and clean energy procurement at federal agencies; $3.2 billion for upgrading critical public facilities like schools, public hospitals and emergency facilities; $18 billion for rebates for home efficiency and electrification improvements; and $3.5 billion for the Department of Energy's Weatherization Assistance Program. There’s also a $27.5 billion clean energy accelerator for financing low- and zero-emission technology adoption, including green buildings.

The Ways and Means Committee’s tax bill would modernize the outdated incentives for energy efficiency improvements for homes and buildings, including more than doubling the incentive levels. The Sec. 179D incentive would jump from $1.80 per square foot for efficiency improvements to a sliding scale between $2.50 and $5. It also implements a new framework for making the deduction more accessible for retrofits to existing buildings. Additionally the Sec. 45L credit for new home construction would jump from $2,000 currently to $2,500 for meeting Energy Star requirements and $5,000 for net zero energy homes. By shifting to the Energy Star performance metric, it also would be much more attractive for multifamily projects.

Drawbacks of the current package

The news isn’t all rosy, though. The House Financial Services Committee’s reconciliation bill would spend $150 billion to $200 billion on new construction and renovation of affordable housing. The committee should be commended for including $6 billion for energy efficiency and other clean energy improvements, but the vast majority of the bill’s funding is silent on sustainability criteria or guidance. The Education and Labor bill, which calls for more than $80 billion for new and renovated school buildings, does contain language encouraging climate-friendly projects, but it effectively leaves to the states what that constitutes.

These are unnecessary flaws in the package that could lead to decades of carbon emissions that partially offset the gains we make with the other investments. USGBC is advocating to improve the bills with simple language calling for sustainability to be embedded across the different pots of funding. Additionally, as the bills move to the Senate, we know there will be pressure to pare back spending levels. We encourage you to join us in pressing your lawmakers to maintain strong funding and criteria for green buildings.

The timeline for progress remains unclear, but self-imposed deadlines of later this month are likely to be pushed back. Nonetheless, if things proceed as expected, we could soon see legislation on President Biden’s desk that generates a wave of green building projects nationwide.