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2006-11-01 News Release
Plastics and the 2005
Energy Policy Act
Roof systems on low rise buildings with foam insulation levels using
structural plastics materials may be instrumental in achieving an EPAct
partial tax deduction.
With the price of oil hovering around $60 a barrel, energy costs could
remain quite high for the foreseeable future. Therefore it is more important
than ever to insulate your home, building and mechanical equipment. For
architects, contractors, and building owners, there is some relief in
the form of comprehensive energy legislation that offers tax incentives
and deductions for the creation of more energy-responsible homes and buildings.
Find
Information and Suppliers of Foam Insulation.
When it comes to specifying building materials that save owners money,
it is important to know not only the thermal properties, but also the
current legislation. Energy-efficient in both manufacture and performance,
many types of plastics insulation products--from
polyurethane to spray polyurethane foam (SPF) to polyisocyanurate (polyiso)--can
help a project achieve tax incentives.
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Signed into law in August
2005, the Energy Policy Act of 2005 (EPAct) includes precedent-setting
tax incentives for energy efficient commercial buildings,
public buildings, and homes to help combat the nation's
growing energy problems. photo: API |
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Commercial Buildings
The the Energy Policy Act of 2005 (EPAct) provides tax deductions for
owners of commercial buildings who make improvements that reduce energy
and power costs by 50 percent over American Society of Heating, Refrigerating,
and Air-conditioning Engineers (ASHRAE) 90.1, Energy Standard for Buildings
Except Low-Rise Residential Buildings. Since it was developed in response
to the energy crisis of the 1970s and as a minimum standard for energy
conservation, ASHRAE 90.1 has been the basis for commercial energy codes
and standards for building design and construction throughout the United
States. The U.S. Department of Energy (DoE) established ASHRAE 90.1-2001
as the commercial building reference standard for state building energy
codes under the federal Energy Conservation and Production Act.
Insulation, HVAC systems, and lighting technologies can meet EPAct criterion.
The tax deduction (not credit) is equal to the cost of energy-efficient
improvements installed in a building, up to $1.80 per square foot. To
qualify, improvements must be installed as part of one or more of the
following three building systems:
. interior lighting;
. heating, cooling, ventilation, and hot water; or
. the building envelope (including insulation).
In cases where energy-efficiency improvements do not meet the overall
50 percent threshold, a partial tax deduction (of up to 60 cents per square
foot) is allowed with respect to each of the three building systems. To
qualify, the improvements must equal or exceed system-specific savings
targets established by the Secretary of the Treasury. These targets are
set out in IRS
guides issued in July 2006.
Another issue involving partial tax deduction relates to improvements
to HVAC and the building envelope. In this case, it is possible for building
owners to obtain a $1.20 deduction per square foot for upgrading these
systems. To qualify, the improvements must also equal or exceed system-specific
savings targets to be established by the Secretary of the Treasury (which
have yet to be announced). Roof systems on low-rise buildings with enhanced
insulation levels may be instrumental in achieving a partial tax deduction.
These roof systems can include the use of structural insulated panels
(SIPs), spray polyurethane foam (SPF) and polyiso, among other plastics
materials.
EPAct specifies guidelines for calculating and obtaining certification
of energy savings. A list of software for this purpose is available in
the 2005 California Nonresidential Alternative Calculation Method Approval
Manual.[2] It outlines the requirements for individuals or companies wishing
to design a calculation computer program to use with the energy standards.
The new act also notes procedures will be defined for inspection and testing
by qualified individuals to ensure compliance of buildings with energy
savings plans and targets.
Maybe it's time to check your Homeowners
Public Buildings
Public buildings, such as schools and other government-owned properties,
also can be eligible for a tax deduction. In this case, the deduction
can be allocated or transferred to the person primarily responsible for
designing the property instead of the owner (i.e. the architect firm responsible
for the public school). In addition to this federal legislation, many
states--including California, Maine, North Carolina, Oregon, and Washington--are
enacting laws requiring "green" certification for state-owned
buildings.
Residences
In addition to commercial and public buildings, EPAct provides incentives
to homebuilders and home manufacturers. An eligible contractor who constructs
a qualified energy-efficient home can qualify for a credit of up to $2000.
The credit is available for all new homes, including manufactured units
constructed in accordance with the U.S. Department of Housing and Urban
Development's (HUD's) Federal Manufactured Homes Construction and Safety
Standards.
With regard to site-built homes, the credit of $2000 is available to
those certified to have a level of annual heating and cooling energy consumption
at least 50 percent below a comparable home constructed in accordance
with the standards of the 2004 supplement to the 2003 International Energy Conservation Code (IECC). This benchmark can potentially be reached through
the proper use of plastic insulation, such as polyurethane and polyisocyanurate
foams.
Manufactured homes are eligible to qualify for the $2000 credit in the
case of a 50 percent efficiency improvement and $1000 credit for a 30
percent improvement or compliance with Energy Star® criteria. For
manufactured homes meeting the 30 percent standard, one-third the savings
must come from the building envelope. For site-built and manufactured
homes meeting the 50 percent standard, one-fifth the savings must come
from the building envelope.
View Homes for Sale in the U.S.
According to the Internal Revenue Service (IRS), tax deductions are effective
for property placed in service from January 1, 2006 through December 31,
2007. Under the new provision, the home qualifies for the credit when:
. it is located in the United States;
. its construction is substantially completed after August 8, 2005;
. it meets the statutory energy-saving requirements; and
. it is acquired from the eligible contractor after December 31, 2005,
and before January 1, 2008, for use as a residence.
Special thanks to Jared O. Blum, the president of the Polyisocyanurate
Insulation Manufacturers Association (PIMA), the Washington-based national
trade association representing the manufacturers of polyisocyanurate (polyiso)
foam insulation for this article. The association is committed to working
independently and with public and private organizations to provide education
about the critical importance of national energy conservation.
Learn more about Alliance
for the Polyurethanes Industry.
1] As more information becomes available from the Secretary of the Treasury,
it will be included on the Polyisocyanurate
Insulation Manufacturers Association web site.
[2] For more information, visit the California
Energy Commission.
Read a recent press release about - In energy efficient homes, homeowners
are generally unknowledgeable when it comes to the amount of insulation
in the attic.
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