The U.S. Green Building Council (USGBC) calls on the U.S. Senate to reject the proposed budget reconciliation legislation released by the Senate Finance Committee.

“This bill would wipe out 20 years of bipartisan tax policy aimed at encouraging smarter, more energy-efficient construction practices and pull the rug out from under the builders and other companies across the country that have planned projects that are using these incentives,” said Elizabeth Beardsley, senior policy counsel, USGBC.

“The homebuilding and construction sectors are already facing severe hardship from new tariffs, high interest rates and inflation. This bill would effectively add increased taxes to that list, and for projects underway and relying on these incentives, it would do so in a punitive way by giving projects just six months to a year to be completed, likely to be impossible for new home construction that is so desperately needed,” Beardsley said.

The Senate bill would terminate three energy efficiency tax incentives: The Sec. 45L tax credit for new energy-efficient homes and the Sec. 179D tax deduction for energy-efficient commercial buildings would be eliminated 12 months after enactment. Under the Sec. 45L language, homes would have to be completed and sold or leased within 12 months of enactment of the law to be eligible for the tax credit, and building projects under Sec. 179D would have to be completed and placed in service within 12 months of enactment.

The bill also terminates the Sec. 25C tax credit for homeowner energy efficiency improvements to existing homes within 180 days of enactment. It would repeal the Sec. 30C tax credit for alternative vehicle fueling infrastructure within 12 months of enactment, while phasing down the Investment Tax Credit for solar investments in commercial buildings over the next two years.

“These incentives are about preparing U.S. companies to lead in the energy economy of the future. At a time when American companies have invested and positioned themselves to lead, these drastic and abrupt policy changes undermine their investments and growth. Instead, these changes would lead to less energy security, put communities at greater risk of power outages, and provide fewer options for consumers and businesses,” Beardsley said.

Like the House reconciliation bill, other pieces of the Senate reconciliation package would rescind unobligated balances in a host of federal programs aimed at improving federal buildings at the General Services Administration (GSA), retrofitting low-income housing under the Department of Housing and Urban Development (HUD) to be more energy efficient and resilient, kickstarting the market for low-embodied carbon construction materials through programs at GSA and EPA, and other initiatives. The Senate package does include a much-needed expansion of the Low-Income Housing Tax Credit and largely maintains the Investment Tax Credit for geothermal energy systems, although adding significant new conditions.

“This bill would, without question, lead to slow investment and economic activity around clean energy and efficiency in the construction and real estate sectors, creating job losses in the related building trades. Losing these investments would also have longer-term consequences, leading to higher electric bills and even more strain on the grid when the trends already look troubling for grid reliability,” Beardsley added. “We urge the Senate to reject this bill.”