Sec. 207. Performance-based tax credits for commercial and residential buildings
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The Internal Revenue Code of 1986 is amended by inserting the following after section 45U (as added by this Act): In this section: The term Btu means British Thermal Unit. The term building energy means energy consumed at the building site as measured at the site boundary, which includes heating, cooling, ventilation, domestic hot water, indoor and outdoor lighting, plug loads, process energy, elevators and conveying systems, and intrabuilding transportation systems. The term deep energy retrofit means a project that uses energy efficiency measures and renewable energy resources to reduce the energy use of an existing building by at least 50 percent on an annual basis relative to the most recent 12-month period in which the building was fully occupied prior to the project, provided that energy efficiency measures must account for at least 80 percent of the reduction in energy use.
The term delivered energy means any type of energy that could be bought or sold as building energy, including electricity, steam, hot or chilled water, natural gas, biogas, landfill gas, coal, coke, propane, petroleum and its derivatives, residual fuel oil, alcohol-based fuels, wood, biomass, and any other material consumed as fuel. The term exported energy means on-site renewable energy supplied through the site boundary and used outside the site boundary. The term high rise commercial building means a commercial building of four or more above grade stories.
The term high rise residential building means a multifamily building with four or more above grade stories. kW h The term kWh means Kilowatt Hour. The term low rise residential building means a single-family home or multifamily building with no more than three above grade stories. The term on-site renewable energy means any renewable energy collected and generated within the site boundary that is used for building energy, and the excess renewable energy exported outside the site boundary, provided that any renewable energy certificates associated with the on-site renewable energy must be retained or retired by the building owner or lessee to be claimed as on-site renewable energy.
The term renewable energy means energy generated by biomass, hydro, geothermal, solar, wind, ocean thermal, wave action, or tidal action resources. The term renewable energy certificate means a certificate or credit that represents and conveys the environmental, social, or other nonpower qualities of one megawatt hour of renewable energy, and can be sold separately from the underlying physical electricity associated with the renewable energy resource. The term site boundary means the limits of the building site across which delivered energy and exported energy are measured.
The term source energy means building energy plus the energy losses in thermal combustion in electricity generation resources; and energy losses in transmission and distribution to the building site. The term zero-energy building means a building for which, on a source energy basis, the actual annual delivered energy is less than or equal to the on-site renewable exported energy, provided that energy purchased from off-site and renewable energy generated on-site and then sold off-site shall be valued at 6000 Btu/kWh.
The term zero-energy-ready building means a building that— if it is a commercial building or high rise residential building— is in compliance with Standard 90.1–2019 published by the American Society of Heating, Refrigerating and Air-Conditioning Engineers; is in compliance with Appendix CA (Solar-Ready Zone) of the 2021 International Energy Conservation Code; and demonstrates that its energy consumption is at least 30 percent below the maximum permitted under American Society of Heating, Refrigerating and Air-Conditioning Engineers Standard 90.1–2019, as calculated using the methodology in Appendix G of such standard; and if it is a low rise residential building— has an Energy Rating Index of 40 or less as calculated using the procedures in Chapter 3 of the residential section of the 2012 International Energy Conservation Code but excluding any renewable energy resources in the calculation, provided that certification of compliance with the Energy Rating Index requirement shall be made by a registered architect or engineer by another professional authorized by the Secretary of Energy by rule; is in compliance with Appendix RA (Solar-Ready Zone) of the 2021 International Energy Conservation Code; and is certified under— the Zero Energy Ready Homes program administered by the Department of Energy; or the Passive House specifications of the Passive Institute US or the International Passive House Institute.
To be eligible to receive a tax credit under this section, the builder or owner of a building must demonstrate that— the building is located in the United States; the building is at least 50 percent occupied when the tax credit is claimed; if the building has implemented a deep energy retrofit, the project has been completed and certified as a deep energy retrofit by a registered architect or engineer, or by another professional authorized by the Secretary of Energy by rule; and if the building is a zero-energy building, the building has been zero-energy over a span of 12 continuous months with at least 50 percent occupancy as verified— through certification by the Living Buildings Institute Zero Energy Certification Program; through certification by the LEED Zero Energy Certification Program Verification; or by another professional authorized by the Secretary of Energy by rule.
The following tax credit amounts shall be awarded for certified zero-energy-ready buildings— for a residential building with no more than four dwelling units, $5,000 per dwelling unit; for a residential building with five or more dwelling units, $3,500 per dwelling unit; and for a commercial building, $3 per square foot of floor area. The following tax credit amounts shall be awarded for certified zero-energy buildings— for a residential building with no more than four dwelling units, $5,000 per dwelling unit; for a residential building with five or more dwelling units, $3,500 per dwelling unit; and for a commercial building that is a zero-energy building for a period of 12 continuous months starting after the building is at least 50 percent occupied, $3 per square foot of floor area, provided that a zero-energy building may also receive the zero-energy-ready building incentive if it meets the criteria for this incentive.
The following tax credit amounts shall be awarded to buildings upon completion of a deep energy retrofit— for a residential building, $10,000 per dwelling unit, up to a maximum of $1,000,000 per building; and for a commercial building, $25 per square foot of floor area, up to a maximum of $2,000,000 per building. The person eligible to receive a tax credit under this section shall be— for a new residential building, the builder; for an existing residential building that has undergone a deep energy retrofit, the builder; for a new commercial building, the building owner; and for an existing commercial building that has undergone a deep energy retrofit, the building owner.
A building owner who is eligible to receive a tax credit under subparagraphs
(C)and
(D)of paragraph
(1)may transfer such tax credit to the architect, builder, or contractor. A building project is not eligible for tax credits under this section if the owner or builder has used another Federal tax incentive for the same project, including incentives under sections 25C, 25D, and 179D of this title. The tax credit authority under this section shall terminate— for zero-energy and zero-energy-ready residential buildings, one year after the Secretary of Energy determines by rule that such buildings accounted for at least 20 percent of new residential buildings in the most recent calendar year; for zero-energy and zero-energy-ready commercial buildings, one year after the Secretary of Energy determines by rule that such buildings accounted for at least 20 percent of new commercial building construction in the most recent calendar year; for deep energy retrofits to residential buildings, one year after the Secretary of Energy determines by rule that at least 10 percent of units at residential buildings have undergone such retrofits; and for deep energy retrofits to commercial buildings, one year after the Secretary of Energy determines by rule that at least 10 percent of the floor area of commercial buildings has undergone such retrofits. Not later than one year after enactment of this section, the Secretary, in coordination with the Secretary of Energy, shall promulgate rules to implement this section. Not later than two years after enactment of this section, and each calendar year thereafter, the Secretary shall report to Congress on the use of tax credits under this section broken down by the categories in subsection (c), which report shall include— the dollar value of tax credits awarded to date and in the prior calendar year; and the number of units at residential buildings and the number of square feet of floor area in commercial buildings for which tax credits were awarded to date and in the prior year calendar year. . The table of contents of the Internal Revenue Code of 1986 is further amended by inserting after the item relating to section 45U (as added by this Act) the following: Sec. 45V. Deep energy retrofits and zero-energy commercial and residential buildings. .