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Is Energy Efficient Infrastructure No Longer a High Priority?

Just weeks before the pandemic, energy efficiency was one of the main topics of discussion for building owners and managers. On April 29th, Johnson Controls released the findings of their annual Energy Efficiency Indicator survey. The report, conducted in November and December, is meant to track current and planned investments, key drivers, and organizational barriers to improving energy efficiency in building facilities. The findings showed that 75 percent of surveyed organizations in the United States were planning to increase investment in energy efficiency, renewable energy, and smart building technology over the next twelve months. 

Of course, that was before COVID-19. As many sectors of the economy have ground to a halt, we have seen record high unemployment numbers including clean energy jobs. The clean energy sector saw an unemployment level of 17 percent, which has left us second guessing if energy efficiency is still a priority for 2020. With so much of our attention turned to building health, tenant vacancies, and managing a workforce largely on house arrest, energy efficiency and sustainability initiatives have declined dramatically.  

According to Environmental Entrepreneurs, an advocacy group focused on advancing smart climate policies, nearly six-hundred thousand jobs have been lost because of the coronavirus pandemic. Many of these jobs were not necessarily lost due to stay-at-home orders. Most of the energy industry jobs are considered “essential.” The downturn of jobs is likely due to the lack of funds being directed towards energy efficient infrastructure services. These services include solar installs, lighting installs, install of energy star appliances, and high efficiency HVAC systems.

To further impede energy efficient building infrastructure, natural gas prices are on a down turn as well. With gas prices already low after a warm winter in the Northern Hemisphere, and storage facilities being filled because of the halt the coronavirus pandemic has put on the global economy, reducing energy and fuel expenses may not be a priority for building owners in the short term. 

Despite our attention being pulled from efficiency upgrades, it doesn’t have to be. Many energy efficient upgrades serve a dual purpose that can benefit the growing health concerns the pandemic has spurred as well as making improvements to operating income. For building owners and managers still considering energy efficiency improvements, there remains a short window to take advantage of several expiring incentives. Although not a new tax incentive, the 179D Commercial Buildings Energy Efficiency Tax Deduction will expire December 31, 2020. This rule allows for a tax deduction of $1.80 per square foot to owners of new or existing buildings who install interior lighting, building envelope, or HVAC/hot water systems that reduce the building’s total energy and power cost by 50 percent or more in comparison to a building meeting minimum requirements set by ASHRAE Standards. Deductions up to $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems that partially qualify. 

Although there is not much promise on the federal government providing any specific COVID-19 relief for energy efficient services, there are many voices making it known that it is wanted and needed for the industry. “The federal government should invest COVID-19 stimulus funds in energy efficiency services, which will not only generate jobs in the short term but also lay foundations for a stronger and more resilient economy,” writes Dr. Timothy D. Unruh, executive director of the National Association of Energy Service Companies.

The majority of building managers are anticipating that they will require office renovations or updates to help keep workers safe from growing health concerns. Many companies have decided that changes to air filtration systems are necessary before allowing their employees to resume work inside the office. While you may already be planning on making these changes, it’s worth noting that right now presents a great opportunity to utilize a building’s down time to make the change to a high efficiency HVAC system. If your team can align their sights with the short window remaining, you could essentially kill two birds with one stone. Not only by making updates to building air quality to satisfy and build rapport with tenants, but also by making the change to higher efficiency heating and cooling systems that often go hand in hand with air quality. 

Making updates to these systems can be challenging to plan considering a building’s entire climate control system can be compromised for several hours or even days while necessary changes are made, leaving you with what could be disgruntled tenants or employees having to deal with the excess heat of the summer or the cooler air of the winter saturating the building. Right now, while the majority of workers are still on stay at home orders, causing so many buildings to sit empty, we are provided with an excellent opportunity to make updates. Giving the technicians the time they need to make installs that will disrupt service is best done at a time while occupants are not affected. This means building managers are not burdened with juggling the logistics of trying to efficiently manage timing, power outages, climate control loss, and keeping people out of working areas. 

It’s hard to say now what the next few months will hold, but energy efficient services are down significantly and attention has been pulled off the market. But with our evolving social values, many individuals view energy efficient upgrades as a moral obligation. Investors still prize net operating income, but they are also increasingly concerned about being good corporate citizens. With social responsibility being one of its key marketing tools and a growing demand for more hygienic building systems, the energy efficiency industry may be poised to recover quickly once buildings begin operating at capacity again.

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