Friday, April 18, 2014
By RICHARD BURBANK and PETER TROAST
At the moment, the national political dialogue is focused on the looming "fiscal cliff," tax reform and economic policy.
Here in Maine, most people are more concerned about the impending winter season, filling up heating fuel tanks and making sure they'll be able to make it through another one of our notoriously brutal winters.
Strangely enough, these two seemingly distant issues are actually closely related.
Heating oil is one of the most expensive home heating options, and in Maine we're reliant on heating oil to a near-dangerous degree. While "pain at the pump" has become a cliche in discussions of oil prices nationwide, most Maine families feel the impact of oil price spikes just as painfully when the oil truck arrives as when they fill up their car's gas tank.
And that's just those of us who can afford heating oil at all: Some 65,000 Mainers rely on the Low Income Home Energy Assistance Program to keep their tanks full. For folks lucky enough to have alternatives to oil -- like wood, natural gas and propane -- heat is still a precious and expensive commodity.
So what does this have to do with the fiscal cliff and tax reform? Well, energy policy has always been closely tied to the tax code. Tax credits have been the most powerful means of incentivizing energy-efficiency upgrades.
This week, the Senate Finance Committee has taken up the subject of tax reform and energy policy, and as her last term in the Senate comes to a close, Maine Sen. Olympia Snowe continues to be at the center of this policy discussion.
Over the years, Snowe has been Congress' champion for energy-efficiency tax credit reform. Specifically, she's led the effort to shift the credit from a cost-based approach tied to specific measures -- like the installation of new windows, roofs and doors -- to one based on performance.
While the old tax credit, which provided as much as $1,500 back to a taxpayer, was well-intentioned, there was, however, no guarantee that new windows, for example, would produce actual energy savings. (It may come as a surprise to many people that new windows are often not the most cost-effective way to lower a home's energy use.)
In the reform legislation that Snowe, a Republican, has introduced, the tax credit would be available only for homeowners who accomplish real, measurable energy reductions. This seemingly subtle shift in language is actually very significant.
Energy savings projections are made by a certified energy auditor, and they're reliable. This ensures that the credit -- and let's remember that reducing taxes comes at a cost to the U.S. Treasury -- gets used only in situations where the energy-use reduction is real and measurable.
Still, it is a fair question to ask about the impact of these credits on our economy and the well-being of taxpayers. Does the benefit justify the cost?
Energy efficiency is far and away the most beneficial of all approaches to reducing our dependence on foreign, polluting and high-cost energy sources.
• When a home becomes more energy efficient -- say, through an upgrade to insulation and tightening the building's envelope -- that improvement produces savings forever.
• In addition to saving on energy, that home is likely to be more comfortable and healthy, and to have greater value at the time of sale.
• And, perhaps best of all given the lingering economic malaise our country faces, energy-efficiency work is virtually 100 percent American-made.
Compared to solar panels, which may be made in China, the work of energy efficiency is local and labor-intensive, providing well-paying jobs for American workers. Even the materials, like insulation, are almost all made in the United States.
In our view, that is good tax policy. It is a direct investment in local businesses (which pay taxes); it increases the economic well-being of local families and communities (helping other local businesses stay strong); it diverts money from oil companies and overseas dictators, and it increases American energy independence.
As the "fiscal cliff" looms, Mainers ready themselves for another long winter and Snowe prepares to leave the halls of the Senate, we'd like to applaud her dedication to balancing fiscal responsibility with a commitment to the people of Maine, far too many of whom will struggle to keep warm this winter. She's been a true leader on energy efficiency, and we're hopeful that Sen.-elect Angus King will take up the energy- efficiency mantle.
Richard Burbank is president of Evergreen Home Performance in Rockland, and Peter Troast is CEO of Energy Circle in Yarmouth.