“Real estate is the largest source of clean energy in this country, and it’s very inexpensively tapped.”
So said Tony Malkin, the president of Malkin Holdings, owner of the Empire State Building.
Malkin spoke this week at the annual Energy Efficiency Forum in Washington, D.C., and he’s got a point, albeit a controversial one.
If we — or, more to the point, the people who represent us in Washington — have $1 to spend, better that it be spent on energy efficiency than on clean energy. That’s not way things work now. Today, wind and solar power get generous tax breaks and subsidies. Energy efficiency investments do not. The government has it exactly backward.
Why? First, let’s stipulate that money spent on efficiency and on clean energy creates short-term jobs. The efficiency-related jobs are more likely to be US jobs (because most solar panels are made in China) but set that aside for a moment. What matters is what happens after the insulation goes into a building, or the solar panels go up on the roof.
The problem with clean energy is that electricity from wind turbines or solar panel, as a rule, costs more than power generated by burning coal or natural gas. If it didn’t, the wind and solar industries wouldn’t need the investment tax credits and renewable portfolio mandates that are vital to their business. But over time the higher costs of clean energy create a drag on economic growth, whether they are paid by the government or by energy users.
By contrast, money spent on efficiency reduces costs over time. So, whether we are talking about more efficient factories, commercial buildings, homes or even cars, the spending on efficiency makes the economy more productive, driving economic growth and creating jobs in the long run.
Yet the government generously subsidizes wind and solar. Efficiency, not so much.
Actually, it’s a bit worse than that. Since businesses can deduct legitimate expenses on their tax returns, they pay less than the full cost of their electricity bills.
“I get a tax deduction for wasting energy,” Dave Myers, president of the building efficiency business at Johnson Controls, said wryly during the forum.
“It is absolutely insane to me that energy can be expensed on your tax bill,” Malkin agreed.
Let me hasten to add that we need both energy efficiency and clean energy, and in my view, both deserve strong policy support. Remember, scientists say that to avoid risky climate change, the world needs to curb its greenhouse gas emissions by 80% by 2050. That will require the aggressive deployment of low-carbon energy sources, as well as dramatic gains in efficiency. But we also should be clear about how the costs and benefits work, so we can get the policy right, and especially think about why the government isn’t doing more to promote efficiency.
Next page: Many happy returns
I agree, for the most part,
I agree, for the most part, with both comments above. There are lots of energy efficiency incentives out there. Another item that I believe is incorrect, or at least not stated clearly, is that coal and other forms of energy are also heavily subsidized. It's not as transparent, but coal and nuclear are at least as heavily subsidized as renewables.
With all of that said, energy efficiency is always the place to start before implementing renewable energy measures.
Your article is factually
Your article is factually incorrect. There is enormous tax benefit to focusing on efficiency delivered through EPACT 2005. Even projects completed years ago (Back as far as 5 or 6 years) can be deducted. Also, most of the incentives are driven at the state and utility level which is where they should be. Electricity cost vary greatly around the country which means projects are more attractive relatively.....which is how it should be.
There are other reasons many businesses do not pursue efficiency in the traditional terms (Lighting, HVAC, Controls). Sometimes, traditional strategies only address a small portion of the total electricity spend (Steel, manufacturing, plastic extrusion etc.). Prioritizing capital expenditures keeps many companies from addressing energy saving strategies.
Actually, the government has
Actually, the government has been promoting energy efficiency as well as conservation, for quite some time.
It's recently opened up new energy "Hubs" (including one here in Philadelphia) and has many MANY ongoing programs which make clear that efficiency is a major component in a balanced energy strategy.
One look here
http://www.eere.energy.gov/ and it's clear that there is a new, even sharper focus on consumer and manufacturing efficiency among todays policy makers.
Going back a bit, there has been a new light bulb program, a super efficient refrigerator program, programs to increase motor/pump efficiency, programs to replace diesels with hybrid trucks/trains/buses, many, many programs to increase auto fuel efficiency, factory floor efficiency, as well as encouraging early consumer adoption of Energy Star appliances, homes, and soon- energy star rated commercial real estate.
I dare say that, government aside, LEED is quite focused on efficiency! (even though it's pricey to implement) additionally, there are several less expensive ways to make homes more efficient- such as the German PassivHous standard- which is also (slowly) taking off here in this country.
Over the road trucks are soon to see a 2-3 MPG mileage boost, and the very aggressive 2016 CAFE standard for cars has already been implemented.
Your headline simply is .... far too simple.
It's going to take "all of the above" strategy to reduce the frightening increases in C02 emissions- energy efficiency being but one (albeit important) part of the solution.