Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

As the last days of the year wind down, Congress scurries around to finish its unfinished business, almost always with "surprises" for the regulated community. 

The House appropriations committee issued a final version of the 2012 Omnibus spending bill last night.  It has, of course, significant implications for energy and environment spending, particularly spending related to climate change.

The omnibus bill cuts spending on climate change programs, prohibits the appointment of a Federal "Climate Change Czar" and cuts spending on climate change research.

Most stunning, of course, are changes to EPA funding.  The summary of the omnibus bill issued by the House appropriations committee states that EPA funding has been reduced by almost 19% in 2011:

The conference agreement funds EPA at $8.4 billion, which is a $233 million reduction below the FY 2011 enacted level and $524 million below the President’s request. Overall, funding for EPA has been reduced by $1.8 billion (-18.4%) in calendar year 2011.

The conference agreement cuts $14 million (-6%) in clean air and climate research programs; $12 million (-9.5%) in EPA’s regulatory development office; and $14 million (-5%) to air regulatory programs. In addition, the bill includes:

• A 33% reduction to the EPA Administrator’s immediate office;
• A $101 million reduction for the Clean Water and Drinking Water State Revolving Funds, which received $6 billion in “stimulus” funding;
•  A $78 million reduction for EPA operations/administration, which includes $41 million
• (-5%) in cuts to EPA’s regulatory programs;
• A $14 million (-6.2%) reduction for uncoordinated climate and other air research; and
•  An elimination of $4 million in funding that EPA has used to delay the processing of Appalachian mining permits.

These are some other provisions in the omnibus bill that impact the green building community:

1. Funding for CBECS may be restored--Funding for the Commercial Building Energy which was defunded this year may be restored, paving the way for updating the baseline building energy data at the heart of Energy Star. Division B, Title III on page 44 provides $105,000,000 for the Energy Information Administration. 
2. New energy efficient lighting standards won't go into effect-- The omnibus bill includes a rider which would prevent the new energy efficient lighting standards from going into effect on January 1st, and actually rolls back standards in effect since 2008 for floodlights. 
3. Innovative Technology Loan Guarantee Program has $0.00 appropriated for 2012.  The loan guarantees are for eligible clean energy projects (i.e., agreeing to repay the borrower’s debt obligation in the event of a default), and by providing direct loans to eligible manufacturers of advanced technology vehicles and components. 
4. Appointment of Administration “Czars” for climate change and urban affairs prohibited.

A full version of the final bill is available here, a summary from the appropriations committee is here.

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In Part 3 of GBLB's green finance series (find Part 1 on Top 10 Rules of Green Finance here and Part 2 on Alternative Green Financing Mechanisms here), I will address government incentives and other programs.  I will also highlight some factors that may make green incentives go from rare bird to endangered species. 

As always,  I am not a finance professional, and the goal of these posts is simply to give a high-level overview of government incentives.  As with all financial decisions, please consult your financial professional and attorney for advice specific to your project. 

The Good News About Government Incentives

1. Programs are available at almost all levels of government--The Federal government offers grants, tax breaks, loan guarantees and technical assistance for green building and renewable energy components of commercial, residential and industrial projects.  The Office of Energy Efficiency and Renewable Energy has a pretty user friendly site. States also run incentive programs, and many states have renewable energy credit trading programs (also known as RECs or green tags or SRECs, etc.) which enable producers of renewable energy to get an extra stream of income from their property. For special groups, like Native American Tribes and Veterans, additional resources are available.
2. Some programs come from unusual sources--Not all green building and renewable energy incentives come from government.  Utilities sponsor a lot of programs for both commerical and residential projects (for example, see the programs available from PECO here).  Some non profits and even faith-based organizations are providing green incentives.  A loyal Twitter follower highlighted this program by the Jewish Free Loan Association (available to those of any faith) that provides interest free loans of up to $5000 for energy efficient upgrades for homes and small businesses in the Los Angeles area.
3. Don't neglect technical assistance programs-- One of the most underutilized incentive is technical assistance. Of course, homeowners and businesses can access technical assistance programs, but also municipalities, small businesses  and Native American Tribes can get thousands of dollars in technical assistance for free or reduced cost.  For example, in New York Con Edison provides small businesses with a free energy audit. This can ensure you maximize the benefit of your green project both environmentally and financially. 

And The Bad News

1. The new House is seeking to cut almost all Federal green incentives--According to Green Building Chronicle,The Republican Study Group, made up of more than 100 GOP House members, is targeting the wholesale elimination of funding for:

• Department of Energy Grants to States for Weatherization, $530 million annually;

• EPA’s Energy Star Program, $52 million annually; and

• federal office space acquisitions (which have helped the government build a market for LEED-certified buildings), $864 million annually.

Just to be clear, in a bill seeking $2.5 TRILLION in cuts, these total savings would account for .14% of the savings.

2. States and municipalities are strapped for cash--Like the Federal government, states and municipalities are strapped for cash, and may cut their green incentives to provide things like trash pick up and police.  
3. Some programs are not worth the effort to apply--All programs require paperwork, verification and in some cases, prevailing wage rates.  Sometimes the benefit is not worth the hassle.  
4. Some programs reward green bling rather than cost effective green improvements--Some programs reward the installation of renewable energy components or other "green bling" as opposed to better  insulation or new windows.  It is key to do a cost benefit analysis of any proposed green project to ensure that it has the greatest return on investment.

For more information, the DSIRE database of Federal and state renewable energy and energy efficiency programs is always useful, and be sure to check your state and local environmental departments and local utilities.

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