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Legislative Agenda Jeopardizes Progress

May 31, 2010
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The House Energy and Commerce Committee passed the Home STAR legislation, which will invest $6 billion in a rebate program for homeowners who perform energy-efficiency upgrades. Meanwhile, a parallel bill is being considered: the Building Star Energy Efficiency Rebate Act of 2010, also known as Building STAR, which will provide financial incentives to owners of commercial, industrial, and multifamily residential buildings to retrofit their buildings with energy efficient-equipment and materials. Both pieces of legislation are attractive to our industry, as they are expected to increase energy savings and create jobs in the construction and manufacturing sectors.

The $6 billion Building STAR legislation includes a prescriptive rebate plan and a package of improvements to existing, and in some cases proposed, tax incentives, and codes.

Rebates would cover approximately 30 percent of the cost of installing and/or implementing energy-efficient building equipment, materials, products, and services during 2010, including HVAC equipment, chillers, water heaters and boilers; duct testing and sealing; variable-speed drives for motors; and building energy audits, commissioning, tuneups and training; and energy management and monitoring systems.

The bill also addresses the challenge our industry has faced for years - the replacement of old, inefficient CFC chillers. We estimate that 25,000 CFC chillers are still in operation today, often because removing them is cost prohibitive for building owners. Under the Building STAR plan, building owners who install variable-speed drives and new, more efficient chillers may also be eligible for tax incentives, as well as financing programs designed to help building owners pay for the portion of a retrofit not covered by rebates. The goal is to provide the necessary economic incentives that will encourage building owners to replace or retrofit older, less efficient equipment with technologies that will ensure energy savings and a reduced carbon footprint.

The benefits of this legislation to residential and commercial building owners are clear - rebates, tax incentives, substantial energy savings, reduced utility bills, and the satisfaction that they are positively impacting their environment. But the benefits to the HVAC industry are just as significant - an increased demand for energy-saving technologies and equipment. In fact, Building Star is expected to employ as many as 200,000 people across the United States by the end of 2011, many of them in the hard-hit construction and manufacturing sectors. Bottom line: Investing in improving the energy efficiency of our commercial buildings creates jobs across the entire supply chain.

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A third piece of legislation - the American Power Act, a climate bill proposed by Senators: John Kerry (D-Mass.), Lindsey Graham (R-S.C.), and Joe Lieberman (I-Conn.) - also has the potential to impact the HVAC industry, although passage in the near future is uncertain. In addition to a plan to reduce emissions of pollution-causing greenhouse gases (GHG) 17 percent below 2005 levels by 2020, the bill’s central features include a cap on emissions from utilities, a fee of some kind on transportation fuels, and expanded offshore drilling and nuclear power.

However, obstacles to passing the legislation are substantial, including a potential change in the Senate’s schedule that would place immigration reform ahead of the climate bill. After reports surfaced that the Democratic leadership could move forward on immigration reform, Sen. Graham threatened to withdraw support for the legislation, and the climate bill that was to have been made public on April 26 was instead sidelined.

The bill also fails to define some crucial factors. Until the Environmental Protection Agency determines how much the bill is likely to reduce GHG emissions, boost renewable energy, and cost the average consumer, many senators are not likely to commit to the legislation. Nor can we in the HVAC industry accurately measure the impact this legislation will have upon manufacturers and providers of HVAC equipment and services. For all these reasons, passage of a comprehensive energy/climate bill in 2010 remains uncertain.

Yet the importance of this bill, as well as Home STAR and Building STAR legislation, to both our industry and the nation as a whole, should not be overlooked. Our support of pending energy and climate legislation is critical - not only to spur activity in our industry, but also to help put the United States on a trajectory for economic recovery and energy independence.

Publication date: 05/31/2010
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