Week 2!
Hey guys!! This week was a bit less eventful than last week, and I didn’t make any major breakthroughs with my independent research. However, I’ve worked steadily at my internship, and I’ve probably learned enough about taxes to last a lifetime.
The specific law that I’m working on analyzing – the 179D Energy Efficient Deduction Law – basically incentivizes businesses to employ energy efficient means of building design within the HVAC, lighting, and building envelope components. Fully qualifying components must have an energy reduction amount of 50%, with additional deductions available for partially qualifying properties (see below). The law provided a tax deduction of up to $1.80/square foot (with additional adjustments for inflation) to qualifying buildings. The changes that this law has undergone (due to the passage of the Inflation Reduction Act) have expanded these incentives (up to $5.00/sf for qualifying properties), which means there is more competition among companies to get this tax deduction, which is why my company needs to analyze the law and develop a new business strategy.
(This graphic does a pretty good job of explaining multiple aspects of this law).
| Compliance Path | Savings Requirement* | Tax Deduction** | |||
| taxable years before 2021 | taxable year beginning 2021 | taxable year beginning 2022 | |||
| Fully Qualifying Property | 50% | $1.80/ft² | $1.82/ft² | $1.88/ft² | |
| Partially Qualifying Property | Envelope | 10% | $0.60/ft² | $0.61/ft² | $0.63/ft² |
| HVAC and HW | 15% | ||||
| Lighting | 25% | ||||
| Interim Lighting Rule | 25%–40% lower lighting power density (50% for warehouses) | $0.60/ft²*** | $0.61/ft²*** | $0.63/ft²*** | |
(https://www.energy.gov/eere/buildings/179d-commercial-buildings-energy-efficiency-tax-deduction)
In terms of my independent research, I’ve located two interesting books that I’ve begun to read: “Getting To Yes” by William Ury, Roger Fisher, and Bruce Patton; and “Peacemaking in International Conflict” by William Zartman. Other than that, I’ve continued to read and outline my already-collected sources as thoroughly and efficiently as I can, but I think I’m starting to get enough data/substance for my main argument to start taking shape.
Thank you so much for reading!!
~ Maria
2 Replies to “Week 2!”
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Hi Maria! Even if learning the letter of the law is probably dry, I think it’s really interesting how the government incentivizes energy efficiency and environmental friendliness. Did you learn about the oil crisis of the 1970s at your internship? According to History.com, due to a months-long oil embargo from OPEC and high oil prices after, the government instituted a number of rationing / efficiency measures, created the Department of Energy, and incentivized investment in renewable energy sources. Today, US energy consumption per real dollar of GDP is 40% of what it was in 1975. Really interesting how historical circumstance and government policy interact.
I hope these books are fruitful reading for your senior project.
History.com Editors. “Energy Crisis (1970s).” HISTORY, A&E Television Networks, 11 Jan. 2023, https://www.history.com/topics/1970s/energy-crisis.
Statista. “Energy Consumption per Real Dollar of GDP in the U.S. from 1975 to 2021.” Statista, 31 Jan. 2023, https://www.statista.com/statistics/189759/us-energy-consumption-per-real-dollar-of-gdp-since-1975/#:~:text=In%202021%20the%20U.S.%20energy,thermal%20units%20per%20chained%20dollar.
Interesting! The greening of building heating is a huge part of fighting climate change and an area where gains can be made relatively quickly… so very topical.
And Getting to Yes is a great book.