Energy Efficiency Measures Support Sustainability Plans and Potential Tax Benefits

Posted on April 4th, 2012 by

In a recent report by Ernst & Young, researchers found that only 16% of companies that either have or are developing an environmental sustainability strategy said their tax or finance departments are actively involved in it. The survey entitled Working Together:  Linking sustainability and tax to reduce the cost of implementing sustainability initiatives, highlights how companies not including their tax departments in sustainability plans, are losing big on opportunities for incentives and tax breaks.

The survey covered approximately 225 executives, from a tax or sustainability role. According to Ernst & Young, the responses from these two groups were dramatically different. For example, only 28 percent of the tax directors who were surveyed knew that their companies were actually running a sustainability program. On the other hand, 90 percent of the chief sustainability officers surveyed said their company had a formal corporate sustainability program.

Overall, approximately 40 percent of the respondents are apparently missing some of the potential savings opportunities that various initiatives — such as energy efficiency upgrades — could have in terms of tax obligations.

Only 19 percent of the companies surveyed are using different return on investment evaluations and calculations to consider the impact of environment sustainability projects because they are failing to consider incentives or tax credits that could alter the results, Ernst & Young reported.

In working with businesses throughout the Northeast recognizing their efforts in implementing innovative energy efficiency measures, I often see large portions of the company’s retrofit costs subsidized by aggressive federal and state incentives through their utilities efficiency programs. Not only does this take the sting out of upfront construction costs but it dramatically reduces the payback period of the overall project.

The study clearly spells out what I’ve been seeing in my work for years now: if you’re a manager looking to undergo significant energy efficiency upgrades to your facility(ies), the challenge is not to only create the business case to senior leadership, but it is equally important to ensure you have the right people at the table to develop that case.   Energy efficiency upgrades are more than just tasks to tag on to a project for some nice PR.  They are smart, strategic measures that must be fundamental to any retrofit or new build project.

If you are considering initiating an energy efficiency upgrade project in your company, consider the following steps before you take the next step:

  1. Consult your local utility or energy efficiency program administrator.  Here in the Northeast, utilities or organizations appointed to deliver energy efficiency programs are charged with attaining aggressive energy savings each year.  They want to help you achieve the highest possible savings for your project.  They will also know all about federal and state incentives and rebates available to you to help make the project the most affordable.
  2. Research a design and building team familiar with green building standards and projects.  It’s often easy to install a bike rack or light harvesting in a space to add to your sustainability report, but if the technology does not take into account the building or it’s environment, it’s just paying lip service. A knowledgeable design team will take a holistic approach to the project, considering location and the needs of the occupants to develop a space that works efficiently and effectively.
  3. Going deeper digs ups hidden savings.  If you’ve completed an energy efficiency project in the last few years it may be worth having your team take another look at possible additional efficiency upgrades.   Technologies, especially lighting technologies, advance so quickly that an upgrade could save you even more in energy savings.  Just because you may have taken advantage of incentives a few years back does not mean you will not qualify for incentives again, so it’s certainly worth looking in to.

Energy efficiency upgrade projects can be highly cost effective when a company takes advantage of the many incentives and knowledgeable techniques that are available.  Beyond energy and cost savings most companies often see a boon in productivity as upgraded machinery runs more effectively and staff morale is boosted in new healthier environments.  But the important first step is to consult the experts.  Many tax breaks can only be applied before a project starts so plan and consult early.  Perhaps doing so will have you looking forward to the tax man.


Carrie Nash, is the Strategic Marketing Manager for Northeast Energy Efficiency Partnerships(NEEP), a non-profit organization committed to accelerating energy efficiency in homes, buildings & industry. She also manages NEEP’s blog, Energy Efficiency Matters,

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