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President Barack Obama's "Better Buildings" plan to encourage businesses to become more energy-efficient could fuel a renovation boom for years. However, it faces opposition from Republican lawmakers, as it would eliminate tax breaks for oil companies.
The president gave a rough outline of the plan in a speech yesterday (Thursday) at Pennsylvania State University. He claimed that the so-called "Better Buildings Initiative," if implemented, would make commercial buildings 20% more efficient by 2020, thus reducing business owners' energy bills by $40 billion annually.
However, the main sticking point will be how to pay for the tax incentives in the plan. Obama declined to say what the program would cost, but said it would be paid for by eliminating tax breaks for oil companies.
The new initiative is just a part of Obama's larger strategy to encourage the growth of green energy in the United States. In his State of the Union speech Jan. 25, he set forth a goal of having the country generate 80% of its energy from clean sources by 2035.
The president has proposed revising the current tax deduction to a tax credit that will reward those businesses that invest in making energy-saving renovations. His budget, due Feb. 14, is expected to reveal the details of the program's cost.
Another aspect of the plan calls for the Small Business Administration to encourage lenders to make loans to businesses that want to invest in more energy-efficient buildings.
Obama said switching from the tax deduction to the credit could increase business building retrofit projects tenfold.
The chairman of Pennsylvania's Republican Party, Rob Gleason, immediately poured cold water on the proposal to drop tax breaks for oil companies. He said the administration should be helping domestic energy producers, not punishing them.
"Pennsylvania is ready to develop domestic energy sources that can fill America's energy demands and create good jobs," Gleason told USA Today. "With runaway spending, overburdening regulation, looming tax increases and a hostile position toward current energy industries, how can we trust President Obama to an energy policy that will sustain our 21st-century needs?"
Even Democrats who might otherwise support Obama's desire to draw more tax dollars from oil companies are not optimistic it will happen.
"I would be surprised if [the proposal to eliminate oil tax breaks] got a great deal of traction in the 112th Congress," Sen. Jeff Bingaman, D-NM, chairman of the Senate Energy and Natural Resources Committee, told The Hill on Wednesday.
As pessimistic as it seems, Obama has shown a fresh willingness to work with Republicans since the November midterm elections. Despite early GOP posturing, some Republicans may be willing to work out some sort of deal with the Obama Administration.
If President Obama can somehow find a way to get his "Better Buildings" proposal through Congress, it could bring years of increased profits to any companies with any commercial stake in energy efficiency.
Companies already heavily involved in energy efficient technology like Honeywell International Inc. (NYSE: HON), those that make climate control devices such as Emerson Electric Co. (NYSE: EMR), or heating and air conditioning products like United Technologies Corporation (NYSE: UTX), could see long-term benefits.
General Electric Company (NYSE: GE), which has made two recent acquisitions that will add to its offerings in energy savings, also stands to gain from the Obama proposal.
News & Related Story Links:
- The Hill:
Obama to unveil energy agenda amid mounting GOP challenges
- USA Today:
Obama: Fight for Future is no cakewalk
- Financial Times:
Obama Proposes ‘Green Tax' incentives
- White House Press Office:
Better Buildings Initiative
- Money Morning:
State of the Union: How to Profit From President Obama's New Clean Energy Challenge