Expanding Energy Efficiency

As Congress considers comprehensive tax reform, the National Association of College & University Business Officers (NACUBO), Second Nature (SN), and the American College & University Presidents’ Climate Commitment (ACUPCC) are presenting policy options for changes in tax policy and federal grant programs that would allow colleges and universities to reduce long-term energy expenses, increase operational efficiencies, and ultimately contribute to efforts to contain costs.

The pursuit of substantial energy savings and new efficient and renewable energy production and sourcing — from wind and solar generation, to natural gas cogeneration, to geothermal and biomass heating and cooling systems — reflects a strong and increasing commitment to energy efficiency among presidents and campus business administrators and a mounting consensus that such shifts in campus operations are necessary to maintaining a healthy bottom line. These changes are also spurred in part by the ever-growing environmental consciousness among students, in addition to representing higher education’s commitment to equip graduates to be future leaders and problem solvers within a starkly different energy economy than that of decades past.

Overcoming the ‘Feasibility Gap’
However, colleges and universities have found it challenging to identify external sources to help finance energy efficiency or renewable energy endeavors. Many existing federal energy efficiency or renewable energy incentives were designed as tax incentives for for-profit enterprises, or as grant opportunities for state and local governments.

Many institutions have tackled the low-hanging fruit of energy efficiency and conservation on campuses, but deep energy efficiency — savings of 50 percent or more — is possible and represents a tremendous opportunity for institutions to further reduce operational costs. Assisting institutions in meeting the initial costs of these bigger projects, such as pursuing infrastructure modification and renewable energy alternatives, could allow them to adopt projects previously deemed unaffordable.

Where Are the Potential Savings?
Opportunities for higher education to lower demand through deep energy retrofits fall into three primary categories: smart labs and high-performance buildings, illumination, and IT/computers.

Supply. Many higher education institutions are already pursuing a diverse energy strategy centered on enhanced efficiency and the transition to renewable and reliable clean energy sources as a way to stabilize long-term energy costs, provide hands-on educational opportunities for students, encourage local and regional economic growth through development of new energy markets, and reduce dependence on nondomestic energy supplies.

As the nation moves to increase its share of renewable energy production, lingering challenges include the intermittency of renewable power and the lack of an adequate energy storage and distribution system. In many respects, colleges and universities are in the best position to lead the country in developing solutions to thermal energy storage and distribution because of efforts already underway on many campuses to incorporate smart metering and design micro-grids that can transfer energy across campus infrastructure based on demand.

Policy Options

The ACUPCC Financing Committee and NACUBO’s Sustainability Advisory Panel identified five specific policy solutions that will enable nonprofit higher education institutions to support their environmental aims and enhance their financial stability. These incentives ultimately could help institutions invest in projects that, through time, would yield long-term savings. The solutions identified are:
  1. Allow colleges and universities to use tax-exempt and revenue bond financing to pre-pay power purchase agreements.
Develop new energy efficiency and renewable energy loan options open to institutions of higher education, including establishing a federal loan guarantee program and developing a federal revolving loan fund for energy-efficiency initiatives.
  3. Establish, alter, and fund federal grant programs, including Section 471 of the Energy Independence and Security Act of 20076.
  4. Allow long-term charitable deductions and tax credits for biomass and bio-methane contributions.
Extend eligibility of Clean and Renewable Energy Bonds (CREBs).
At a time when economic resurgence and job creation remain national priorities, incentivizing investment in infrastructure that can lead to economic productivity and markedly lower energy costs is not only logical, but necessary. Federal government support for these policies can open up new possibilities by mitigating or eliminating barriers to furthering energy-efficiency goals at colleges and universities across the country. 

Liz Clark is director, Congressional Relations for NACUBO. She can be reached at lclark@nacubo.org.

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