Volume 37, Issue 3, March 2002
PGMC, Along with Others in the Glass Industry, Work to Convince Congress to Enact Energy Conservation Tax Credits
by Tony Hobart
President Bush’s national energy policy released last May advocated increased funding for energy-efficiency programs and tax credits to encourage consumer conservation. Events since September 11 have only strengthened popular support for conservation and other measures that can help reduce U.S. dependence on foreign sources of energy. The development of a national energy policy is now mainly in the Congress, where an energy bill has been under consideration since last summer.
A Primary Glass Manufacturer’s Council (PGMC) task force led by our company and PPG Industries Inc. has been working to ensure that the energy-saving benefits of low-E and other coated glass products are harnessed to help achieve our nation’s energy conservation goals. Specifically, the task force has been advocating that an energy bill should provide tax credits for residential energy conservation, including incentives for the installation of high-performance windows in both existing and new homes.
A Convincing Argument
The case for tax credits is a strong one. Currently, the potential benefits to individual homeowners investing in energy conservation are less than the potential benefits to the nation as whole. High-performance windows containing low-E glass are becoming more common but still constitute barely more than 40 percent of the new and replacement market, compared with more than 90 percent in Western Europe. A primary reason is that homeowners in the United States move so frequently that they are uncertain whether they will recapture their investments.
According to the PGMC’s task force analysis, a tax credit is needed to help homeowners recover their investments before they move. This credit would make the aggregate benefits of conservation to homeowners equal to the benefits to the nation at large—and these benefits are substantial. If energy-efficient windows were installed in all new construction, the nation’s annual energy bill would be reduced by $2.5 billion by 2010, eliminating the need for approximately 20 300-MW power plants. The environmental benefits are also substantial, since reducing energy demand means cutting carbon dioxide emissions.
Energy-efficient legislation has been sweeping across the nation in recent months.
Over the past five months, task force members have met with many of the senators and congressmen involved with drafting the energy bill. The glass industry message has been well-received. In September, the House of Representatives passed an energy bill (H.R. 4) that provides five years of tax credits for energy-efficiency improvements to building envelopes. It provides a 20 percent tax credit (up to $2,000) to homeowners for improvements to existing homes and to builders for installing energy-efficient building products in new homes. For existing homes to qualify, an authorized inspector must certify that the installed products meet the standard set out in the 1998 International Energy Conservation Code (IECC). Qualifying new homes must exceed the standards of the 1998 code by 30 percent.
The first step toward a Senate energy bill was taken before the holiday recess. On December 5, Majority Leader Tom Daschle and Senator Jeff Bingaman, chairman of the Senate Committee on Energy and Natural Resources, submitted an energy bill (S. 1766) containing non-tax provisions, including those relating to electricity regulation, grants for renewable energy and automobile fuel efficiency. On February 13, the Senate Finance Committee approved a package of tax provisions to be included in the bill. The committee approved credits for both new and existing homes. For new homes that exceed the 2000 IECC standards by 30 percent the committee bill includes a 20 percent tax credit up to $1,250. New homes that exceed the IECC norms by 50 percent would qualify for a 20 percent credit up to $2,000. Existing homes would get much smaller incentives: homeowners installing products at least 30 percent more efficient than required by the 2000 IECC would get a 10 percent credit up to $300.
The consolidated energy bill was expected to go to the Senate floor in mid-March. The Senate-approved bill will then go to a conference committee to work out the differences between the House and Senate versions. Several major issues will need to be resolved. Perhaps the most politically charged issue is whether to permit drilling for oil in the Arctic National Wildlife Refuge. The House bill authorizes drilling while the Senate bill does not. Another difficult issue will be whether to mandate an increase in Corporate Average Fuel Efficiency standards for automobiles.
The PGMC task force will be working to obtain the best possible provisions in the final bill. In addition to focusing on the level of tax incentives, the task force is concerned that the certification process in the bills may be excessively complicated and costly. A homeowner will be less likely to upgrade to high-performance windows if forced to pay for an energy inspector to become eligible for the tax credit. To make the tax incentive more accessible, the task force will urge that the final bill extend eligibility to all fenestration products bearing an ENERGY STAR certification.
In our democratic system of government, the views of constituents are major factors in determining the positions and priorities of our congressional representatives. Interested members of the flat glass industry may want to make their senators and congressmen aware of the need to include tax incentives for new and existing homes in a comprehensive energy bill. Contact information for your congressional representatives is available on the Internet at http://thomas.loc.gov/home/legbranch/legbranch.html. Valerie Block, technical director of the PGMC, can also provide support that may be needed to contact your representatives. She can be reached at email@example.com.
Tony Hobart is group vice president for Guardian Industries Corp. in Auburn Hills, Mich.
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