New energy bill gives tax incentives for energy efficiency

RIVER VALLEY — The new Energy Bill of 2005 will provide tax and rebate incentives to those who purchase energy-conserving products beginning in 2006.

Though there have been tax breaks and incentives for some time on various alternative energy sources such as wind and solar, this will be the first attempt to relate a system of tax breaks comprehensively to the efficiency of energy-consuming goods and even structures.

The act calls for a range of tax reductions linked to the installation of various energy-saving devices and systems, like a tax incentive of 10 percent of the cost, up to $500 per household, in 2006 and 2007, for efficiency upgrades to existing homes. Another example is a 30 percent write-off of the cost for installing residential photovoltaic systems and solar, hot water systems.

The act gives a new prominence to the government’s ENERGY STAR program, whose adoption by home owners and businesses now makes enormous sense in light of the tax incentive program, in the view of David Lounsburg of Narrowsburg Mechanical, an indoor, air-quality, energy efficiency company.

The ENERGY STAR program was introduced in 1992 by the U.S. Environmental Protection Agency (EPA) as a voluntary labeling program designed to help consumers identify energy-efficient products and promote their purchase. The list of products labeled expanded from computers to other types of office equipment to heating and cooling equipment, and now includes boilers, air-conditioners, thermostats, refrigerators, even insulation and windows—any product or system that uses electrical power and fossil fuels. Recently the list has been expanded to cover new homes and commercial and industrial buildings. The type of rating varies with the type of product: the Seasonal Energy Efficiency Rating , for instance, apply to air-conditioning and electrical equipment, while the Annual Fuel Utilization Efficiency rating applies to construction systems. For each of these items, an ENERGY STAR label can be used only if the product or structure in question exceeds the government’s minimum testing standards by a certain amount.

There are several provisions of the Energy Act of 2005 that will have a direct impact on the effectiveness of the ENERGY STAR program. First, it expands the list of products for which the Department of Energy must establish test procedures and efficiency standards. Some of the new items include certain fluorescent bulbs, battery chargers and dehumidifiers. Second, it creates tax credits for manufacturers of high-efficiency ENERGY STAR products. Whether or not any of that credit shows up in consumer pricing remains to be seen, though we should certainly see it on corporate profit-and-loss statements. However, the act also provides states with money for consumer rebates on the energy-efficient items that they buy, and this provision should put money directly into consumer wallets.

The program will be monitored by the EPA, and the possible environmental gains are potentially tremendous. “If just one household in ten bought ENERGY STAR heating and cooling equipment, it is claimed that the change would keep over 17 billion pounds of pollution out of the air,” Lounsbury said.

The average home spends $1,500 on utility bills every year—with more than half going to heating and cooling. These costs could be cut by as much as 20 percent by replacing old equipment with the ENERGY STAR-labeled equivalent.

“In the long run, I see this as helping our industry tremendously,” said Mike Taylor, owner of Combined Energy Services, an air-conditioning company and home heating-oil supplier in Monticello. “We have five installations crews and they are continually getting training in ENERGY STAR methods. As our customers’ appliances and other household items get more efficient, our customers will save money and will appreciate our assistance.”

Cornell Cooperative Extension will hold workshops to help people help themselves to realize lower fuel bills. “We help people tighten up their homes and consume less fuel,” said Craig Fisher, energy educator at the Extension. “We do the same for businesses.” The ENERGY STAR program also provides advice for consumers on energy efficiency, information that may be found at www.energystar.gov.

For more information, call the Extension at 845/292-6180.