Friday, December 08, 2006

Energy Cost Control: How Uncle Sam Helps Industry

There are a couple of ways that the federal government currently assists industry. We’ll describe those below. But first, let’s address an obvious question that no one else seems to ask: if energy improvements reduce expenses (and therefore boost income), why are incentives necessary? The reasons are embarrassingly human, as discussed in “Why Does Industry Resist Energy Management?.”

Somewhere, there may be some debate over the necessity of such incentives, but Energy Pathfinder doesn’t have a dog in that fight. Having said that, it’s worth describing some of the leading incentives that are still available.

An income tax deduction is currently available that can be worth up to $1.80 per square foot. This deduction applies companies that make improvements to their lighting, building envelope (such as windows and insulation), and heating ventilation and air conditioning. Admittedly, energy use by industrial buildings can be small relative to the production machinery housed in the buildings. However, building improvements are usually easier to pursue because they typically don’t interfere with production activities. The tax deduction applies to certain improvements made during 2006-07. Note how Paccar Winch in Okmulgee, Oklahoma took advantage of this incentive.

We’ll say it again: You can’t manage what you don’t measure. The U.S. Department of Energy’s Save Energy Now initiative is providing energy assessments (audits) to large industrial facilities. The application period is currently open for companies seeking an assessment in 2007. Be sure to check out the published results describing over 100 such assessments already conducted in 2006.

The U.S. EPA has developed THE authoritative depository of information for developing a corporate energy management plan. Think of this as the “Cadillac” of strategies—something that is best pursued by companies that maintain a full-time, corporate energy management team.

There’s one more alternative. Wait for policy action, project permits, and contracts that open up new fossil fuel reserves and allow the construction of new power plants. Expect a five-ten year lead time for these projects, which MAY lower energy prices through the additional supply that they deliver. Can you afford to wait?



At 3:29 PM, Anonymous Anonymous said...

Government programs presently support only energy efficient measures for the building, not any of the industrial production, food processing, etc that are conducted inside that building. Machinery with higher efficiencies would decrease the power usage of the building. Additionally, the HVAC load would also go down.
When you buy a hybrid auto, there is a tax allowance. Not so on energy efficient production equipment, premium motors or adjustable speed drives that can reduce energy use by over 50% according to DOE surveys.


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