Discover and Prosper Energy Webinar Series: Tax Credits to Help Make Your Michigan Small Business Energy Efficient

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1 Discover and Prosper Energy Webinar Series: Tax Credits to Help Make Your Michigan Small Business Energy Efficient Mary Huttlinger Small Business Majority

2 Small Business Majority Small Business Advocacy Organization Core Issues o Clean energy, healthcare, access to capital, regulations and job growth National Presence o Offices in DC, New York, Ohio, Missouri, Colorado and California Research Focused

3 Clean Energy: The Big Picture Economic Benefits o Increasing energy efficiencies helps small businesses improve their economic bottom line Competitive Edge o Addressing energy efficiency opportunities helps small businesses become more competitive Excellence in Innovation o Encouraging energy innovation creates alternatives for energy sources Incorporation of Green Technologies o Adopting environmentally-friendly technologies helps improve community awareness

4 Clean Air Act s Impact on Small Business Clean Air Act enacted in 1970 o Ensure Safe Air to Breath and Protect Our Environment Opportunities o Provides an opportunity to move our economy in a new direction o Positions small businesses to drive energy independence & lead environmental change o Spurs technological innovation and positions the US as a world leader in environmental export technologies o Reduces labor costs affiliated with employee illness/ sick days as a result of poor air quality

5 Clean Air Act: Next Steps Rule making to implement provisions of 40-year-old law o Corporate Average Fuel Economy (CAFE) standards o Mercury Rule o Cross-State Air Pollution Rule o Greenhouse Gases Rule o Carbon Pollution Standard for New Power Plants

6 Clean Air Act s Impact on Small Business Small Business Majority s latest economic report found that The economic benefits of the law far exceeded the costs of controlling air pollutant emissions It also showed, from 1990 to 2010, $690 billion in benefits and $180 billion in costs for a benefit/cost ratio of 4:1

7 Michigan Research 67% Say the rising cost of doing business is their biggest concern 81% 74% Support the EPAʼ s new federal standard requiring new power plants to reduce emissions of greenhouse gases Favor proposed rules to reduce smog and soot pollution crossing state lines and contributing to pollution in other states

8 Michigan Research 62% Favor ending subsidies to oil and gas companies 83% 77% Believe government should play an important role in creating financial incentives

9 Clean Energy: The Big Picture In a 2012 study by Small Business Majority, 71% of small business owners nationally felt government investments in clean energy are an avenue toward boosting our national economy and creating jobs o 74% of Michigan Small Business Owners agreed

10 Points to Ponder For every one large business in Michigan, there are 266 small businesses Small firms make up 98.3% of Michigan s employers What if each small business saved just $50 per month (or $600 a year) on their utility bill? That equals to over $500 million of annual savings that could be pumped back into local economies in Michigan Small businesses are 6 times more likely to spend money locally than large companies

11 Michigan Research 80% Interested in incentives or assistance for energy efficiency improvements 57% Have already taken some energy savings measure 50% Are interested in taking some energy savings measure

12 Clean Energy Programs Programs to help small businesses become more energy efficient o Federal Government Incentives o State Assistance o Utility Company Partnerships o Entrepreneur Opportunities and Support

13 Federal Clean Energy Programs for Small Businesses Energy-Efficient Commercial Buildings Tax Deduction Overview Energy Policy Act of 2005 Tax Deduction for small businesses that purchased energy efficient technologies o Benefit: the tax deduction is $1.80 per square foot of energy efficient technologies. o Requirement: the new technologies must reduce the building s total energy and power cost by 50% or more

14 Federal Clean Energy Programs for Small Businesses Energy-Efficient Commercial Buildings Tax Deduction Criteria & Process Timeframe o Technologies must have been installed after Jan. 1, 2006 and before Dec. 31, 2013 How to apply o Include the cost of the technologies in the "other deductions" line of their business tax return Specifics o Property must be inspected prior to any installation

15 Federal Clean Energy Programs for Small Businesses Energy-Efficient Commercial Buildings Tax Deduction Successes On average small businesses have o Saved 30% - 70% in overall energy costs o Seen a 8% - 9% decrease in operation costs o Witnessed a 2% - 16% increase in productivity o Experienced an increase in value of their business by roughly 7.5% o Reduced their liability and improved risk management

16 Federal Clean Energy Programs for Small Businesses Modified Accelerated Cost-Recovery System Overview Tax Relief/Job Creation Act of 2010 Reimbursement for the installation of clean energy technologies o Installed Sept Jan. 2012: 100% of cost of the technology installed o Installed after Jan. 2012: 50% of cost of the technology installed

17 Federal Clean Energy Programs for Small Businesses Modified Accelerated Cost-Recovery System Criteria & Process How to apply o Fill out Form 4562 (Depreciation and Amortization) and submit it with your small business tax return Examples of eligible technologies: o a variety of solar-electric and solar-thermal technologies o fuel cells and microturbines o geothermal electric o direct-use geothermal and geothermal heat pumps o small wind (100 kw or less) o combined heat and power (CHP)

18 Federal Clean Energy Programs for Small Businesses Modified Accelerated Cost-Recovery System Successes Over a 6-week period, some small businesses saved up to $1,000 on their energy bills Other small businesses saved anywhere from $100 to $400 per month by installing solar panels

19 Federal Clean Energy Programs for Small Businesses Overview Business Energy Investment Tax Credit The American Recovery and Reinvestment Act of 2009 Small businesses are eligible for a tax credit for installing renewable energy products o 30% tax credit for installing solar panels to convert solar energy into electricity o 10% tax credit for installing energy efficient heating systems

20 Federal Clean Energy Programs for Small Businesses Business Energy Investment Tax Credit Criteria & Process Timeframe o The renewable energy equipment must be operational in the year the credit is first taken o This credit is available for renewable energy equipment installed on or before Dec. 31, 2016 How to apply o Fill out Form 3468 (Investment Credit) and submit it with your small business tax return

21 Federal Clean Energy Programs for Small Businesses Business Energy Investment Tax Credit Successes Energy savings and generation equal about $100 million per year This program will create 440,000 permanent jobs by 2016.

22 Financial Incentives Summary Database of Nationwide State Incentives Provides a snapshot of government, utility, and nonprofit financial incentives that promote: Renewables: federal, state, utility, local and non-profit Energy Efficiency: federal, state, utility, and local Allows viewers to quickly compare the number and types of incentives in each state. summarytables/

23 The Michigan Clean Energy Picture With 10 million people, a cold climate to combat and heavy industry to power, Michigan needs energy More than 70% of energy consumption is from outof-state sources Researchers estimate that the wind energy industry alone could create 25,000 jobs here by 2025 October 2008: Michigan passed a Renewable Portfolio Standard which will help the state make major strides in renewable energy development over the next decade. Small businesses have the power to generate their own energy or claim significant rebates from state and utility sources for increased energy efficiency

24 MICHIGAN Renewable Energy Renaissance Zones Overview 2006: Michigan created these Zones to offer significant tax benefits to facilities located within their boundaries Eligible facilities could be offered corporate income tax abatement up to 15 years To have an area designated as a zone, a county or community must submit an application to the Michigan Strategic Fund Board Zone designations are approved by the Michigan State Administrative Board and are based upon recommendations from the Fund Board Evaluations will be made based on local economic impacts, job creation, project viability, and other relevant criteria

25 MICHIGAN Commerical & Industrial Energy Efficiency Program Overview Detroit Edison Energy Customers could receive up to 50% of total project cost of new or modified clean technology Rebates include $125 to $300 per refrigerator, $20 per programmable thermostat and up to $900 per oven The technology must be installed in a business facility To participate, verify your project is eligible and wait to begin work until you receive reservation letter from Detroit Edison This program expires November 30, 2012 Detroit Edison is also offering free programmable thermostats

26 MICHIGAN Commerical Energy Efficiency Program Overview Consumers Energy (Electric) Provided by Clean, Renewable and Energy Efficiency Act 2008 Program provides incentives for customers who upgrade their facilities with energy efficient equipment Available to all customers who receive electric delivery service from Consumers Energy Maximum rebate: $100,000 per facility up to a 50% rebate of the entire project cost Customers could receive up to $120 for lighting installations, $50 per clothes washer and up to $700 per ice machine Energy efficient equipment or services rebates must be applied for by November 30 of the program year. Consumers Energy intends to provide this program through 2014

27 Join Our Network Contact Emma Hollister, Network Coordinator Direct: (202) Ways to Get Involved: Connect with Receive a monthly newsletter Share your story for media requests Letters to the editor/op-eds Small Business Majority State events/roundtables Fly-ins Webinars for business organizations

28 Questions? Small Business Majority Mary Huttlinger MidWest Outreach Manager Phone: (513)