The International Institute of Building Enclosure Consultants (IIBEC) supports appropriate tax policies and programs (i.e., low-interest loans, tax credits, and accelerated depreciation) to promote energy efficiency projects designed to expedite carbon reduction goals in the built environment. Credentialed building enclosure consultants should be required for the design and administration of these upgrades to ensure the enclosure meets the carbon reduction goals.
More than half of existing commercial buildings in the United States were built before 2000, and over one-third of Canadian buildings were constructed before 1990. There are almost 129 million non-industrial buildings in the US that collectively use 75% of the nation’s electricity and 40% of its energy. There are another 500,000 commercial and institutional buildings in Canada, using about one-third of energy produced. When the energy that is used in buildings is generated from nonrenewable or fossil-fuel-burning sources, greenhouse gas (carbon) emissions are generated.
Model energy codes are adopted to mandate baseline levels of energy efficiency in new buildings. But even newer structures built to current energy codes can suffer from faulty installation, lack of maintenance, or normal wear and tear, reducing their efficiency. Older, less energy-efficient buildings and underperforming structures use more energy, which significantly limit carbon reduction goals. For these reasons, both newer and older buildings may benefit from energy efficiency upgrades.
Full building retrofits (also known as deep retrofits), where multiple systems are upgraded simultaneously (enclosure, windows, insulation, HVAC, electricity, lighting, etc.), have shown to reduce a building’s energy use by up to 40%—a significant reduction compared to energy saved by upgrading a single building component. (See Fig. 1 on page 1 here.) However, at the current rate of retrofitting of the existing building stock, it will take more than 60 years to complete all commercial buildings, according to American Council for an Energy Efficient Economy (ACEEE) research.
The problem arises because deep retrofits require significant investments and may take months or years before the financial return on investment is realized. Tax policies and programs if designed properly can encourage action within a limited timeframe.
To meet world-wide carbon-reduction goals, energy use by existing buildings must be reduced. While there are different strategies owners can take to achieve this goal, full building retrofits can significantly move the needle to increase efficiency and lower overall energy use. However, these sorts of projects are very costly and take time to plan and schedule.
In order to induce the private sector to expend significant time and money to retrofit existing buildings, governments have multiple proven tax policies and programs from which to choose.
Tax credits and accelerated depreciation have long been used by Federal, state, provincial, and local level government to advance a policy goal. Low interest loans have also been widely used by governmental entities and have proven just as successful in achieving policy goals. Due to their past successes, IIBEC endorses the use of low interest loans, tax credits, and accelerated depreciation, or some combination thereof, to encourage owners to meet energy efficiency and carbon reduction goals. These approaches should be the basis of any legislation focused on carbon reduction in the built environment.
[Note: In this policy statement, “carbon” is used as a proxy for all greenhouse gas emissions known to contribute to climate change, often expressed in carbon dioxide equivalent emissions.]