In his State of the Union address, President Obama laid out his vision for investing in innovative clean-energy technologies and doubling the share of electricity from clean-energy sources by 2035. Additionally, President Obama is proposing new efforts to improve energy efficiency in commercial buildings across the country. Last year, commercial buildings consumed approximately 20 percent of all energy in the U.S. economy. President Obama’s Better Buildings Initiative will make commercial buildings 20 percent more energy-efficient over the next decade by catalyzing private-sector investment through a series of incentives to upgrade offices, stores, schools and other municipal buildings, universities, hospitals, and commercial buildings.

This initiative builds on investments through the American Recovery and Reinvestment Act (ARRA) as well as the President’s proposed “HOMESTAR” legislation to encourage U.S. families to make energy saving upgrades in their homes.

Highlights include:

  • Achieve a 20-percent energy-efficiency improvement in U.S. commercial buildings by 2020 through cost-effective upgrades.
  • Reduce companies’ and business owners’ energy bills by about $40 billion per year by making buildings more energy efficient.
  • Save energy by reforming outdated incentives and challenging the private sector to act. President Obama is calling for an aggressive reform of existing tax and other incentives for commercial-building retrofits and proposing a new competitive grant program. In turn, he is asking corporate leaders to commit to making progress toward his energy goals.

A Plan for Better Buildings

President Obama’s budget will propose to make U.S. businesses more energy efficient through a series of new initiatives, such as:

  • New tax incentives for building efficiency. President Obama is asking Congress to redesign the current tax deduction for commercial-building upgrades, transforming the current deduction to a credit that is more generous and will encourage building owners and real-estate investment trusts (REITs) to retrofit their properties.
  • More financing opportunities for commercial retrofits. Access to financing is a barrier to increased retrofit investment in some market segments. To address these gaps, the U.S. Small Business Administration is encouraging existing lenders to take advantage of recently increased loan size limits to promote new energy-efficiency retrofit loans for small businesses. The budget also will propose a new pilot program through the U.S. Department of Energy to guarantee loans for energy-efficiency upgrades at hospitals, schools, and commercial buildings.
  • A “Race to Green” for state and municipal governments that streamline regulations and attract private investment for retrofit projects. Much of the authority to alter codes, regulations, and performance standards relating to commercial energy efficiency lies in the jurisdiction of states and localities. The budget will propose new competitive grants to states and/or local governments that streamline standards, encouraging upgrades and attracting private-sector investment.
  • The Better Buildings Challenge. President Obama is challenging chief executive officers and university presidents to make their organizations leaders in saving energy. Partners will commit to a series of actions to make their facilities more efficient. They then will become eligible for benefits, such as public recognition, technical assistance, and best-practices sharing through a network of peers.
  • Training the next generation of commercial-building technology workers. Using existing authorities, the Obama Administration is implementing a number of reforms, including improving transparency around energy-efficiency performance, launching a Building Construction Technology Extension Partnership modeled on the Manufacturing Extension Partnership at Commerce, and providing more workforce training in areas such as energy auditing and building operations.