Energy coalition urges passage of legislation expanding home energy efficiency tax credit

The Alliance to Save Energy, along with more than 35 organizations and businesses, on Wednesday urged quick congressional action on the recently introduced Home Energy Savings Act, a bipartisan measure seeking to help lower energy costs and reduce carbon emissions by strengthening a tax credit for energy-efficient home upgrades.

“This is jobs and economic policy. It’s climate policy. And it’s tax relief that puts more money in homeowners’ pockets both in a tax cut and in lower energy bills,” Alliance President Jason Hartke said. “Homeowners overwhelmingly say they want to improve the efficiency of their homes, and this bill provides the incentives that are needed to make the investment happen.

The legislation is sponsored by U.S. Sens. Susan Collins (R-ME) and Maggie Hassan (D-NH) and U.S. Reps. Jimmy Gomez (D-CA) and Mike Kelly (R-PA). It will reinstate and reform the Section 25C credit for homeowner efficiency improvements, which expired Dec. 31, 2017. Under the reformed 25C legislation, homeowners could receive up to $1,200 in tax credits for installing home equipment and components that meet certain efficiency levels, including insulation, doors, windows, air conditioners, heat pumps, water heaters, boilers, and furnaces. The credit is capped for each product category, but the cap would be increased under the bill. For example, the credit for a high-efficiency air conditioner investment would increase from $300 to $600, according to a summary of the bill.

The group also has plans to introduce in the coming weeks the New Home Energy Efficiency Act, which will help incentivize greater energy efficiency in the construction of new homes through the reinstatement and reform of the Section 45L credit for new home construction. It would give homebuilders a $2,500 incentive for building high-efficiency new homes.

“Energy-efficient upgrades not only have an important role in reducing carbon emissions, but can also save families hundreds of dollars each year by substantially lowering their heating and electricity costs,” Collins said. “By updating and extending these two effective tax credits, our bipartisan bills will encourage contractors to incorporate energy-efficient designs and materials in new buildings, as well as make it easier for homeowners to invest products such as energy-efficient windows, air conditioners, water heaters, and biomass stoves.”

The bills have garnered wide support, including from the Natural Resources Defense Council, the U.S. Green Building Council, the American Council for an Energy-Efficient Economy, the National Association of Home Builders, and the National Multifamily Housing Council, among others.

Derek Murrow, senior director of the Climate and Clean Energy Program at the Natural Resources Defense Council (NRDC), applauded the legislation for its strategic use of tax credits.

“Tax incentives are critical to advancing energy efficiency, which results in lower energy bills and less climate pollution,” Murrow said. “It’s great to see bipartisan support for updating and extending tax credits for building new energy-efficient homes and for making improvements to the efficiency of existing homes. Congress can help America’s homeowners by passing these commonsense efficiency tax credits.”

Improved efficiency also will lower the demand on the utility grid and make the U.S. more economically competitive, the NRDC added in a recent blog post.