Finance Green Initiatives With Government Grants, Incentives and Low-Interest Loans

As rising energy costs take an ever bigger bite out of corporate profits, a growing number of companies are looking to green initiatives to improve their bottom line. In fact, many of the world’s biggest companies, including Wal-Mart Stores Inc., General Motors Corp., Ikea, Coca-Cola Co. and many more are going green to cut energy costs and boost profits. But its not just big corporations hoping to slash fuel costs—businesses of every size and type are going looking for ways to reduce their electricity usage.

Many businesses seeking a roadmap to improve energy efficiency look to the ENERGY STAR label, which is a measure of building energy performance. The US Environmental Protection Agency (EPA) released the ENERGY STAR label in 1999. To attain Energy Star status, buildings must achieve a score of at least 75 (1 – 100 scale), which places them in the top 25 percent in the country for energy performance. The EPA reports that commercial buildings that earn the ENERGY STAR label use 35 percent less energy on average, than other commercial buildings.

With a little effort companies small and large can take advantage of government grants, incentives and low-interest loans to help defray the cost of going green and cutting electricity costs by improving the energy efficiency of their buildings or by deploying renewable energy systems such as solar panels. Examples of just some of the ways companies can increase energy efficiency include energy audits, lighting improvements, replacing windows, adding insulation or other retrofits that cut energy usage.

The federal government offers tax incentives, low-interest guaranteed loans and direct payments through grants to help private companies to improve energy efficiency or deploy renewable energy solutions to cut usage of fossil fuel-generated electricity and lower overall energy costs. These financial instruments are primarily administered through the US Department of Agriculture (USDA) Rural Utilities Service (RUS) or the US Department of Treasury.

The USDA Business and Industry Loan Guarantee (B&I) Program provides loan guarantees of up to $10 million to help businesses modernize their facilities and improve energy efficiency to reduce costs. Visit www.rurdev.usda.gov/BCP_gar.html for more information. The USDA’s Rural Energy for America Program (REAP) provides assistance to rural small businesses to complete a variety of projects. REAP offers both loan guarantees and direct payment grants to help small businesses install renewable energy systems such as solar panels or anaerobic digesters, make energy efficiency improvements such as installing irrigation pumps or replacing ventilation systems, and conduct energy audits and feasibility studies. More information about REAP can be found at www.rurdev.usda.gov/bcp_reapreseei.html.

The New Market Tax Credit (NMTC) Program is administered by the Treasury Department and helps small and medium-sized businesses in low-income communities access flexible and affordable financing to implement a broad array of projects, including those that have environmentally sustainable outcomes in low-income communities. For example, NMTCs may be used to support construction or retrofitting of buildings that meet LEED certification standards (green buildings). NMTCs can also be used to directly support the production or distribution of renewable energy resources (e.g., biomass, hydro, geothermal, solar, wind, etc.). More information about NMTCs can be found at www.cdfifund.gov/impact_we_make/nmtc_state_reports.asp. The Internal Revenue Service also offers tax credits for commercial buildings that improve their energy efficiency. More information about these tax credits can be found at www.sba.gov/content/federal-tax-credits-energy-efficiency.

Many states also offer incentives, grants and low-interest loans to support businesses in their efforts to go green and improve energy efficiency. The Database of State Incentives for Renewables and Efficiency (DSIRE) offers a state-by-state list of these instruments. DSIRE is continuously updated and provides information about financial incentives at the state, regional and local levels. Financial incentives can range from tax rebates, deductions or abatements, to loan guarantees, performance-based incentives, grants or utility rebates. The database can be found here www.dsireusa.org/.

As energy costs continue to rise, more and more businesses are seeking ways to cut energy usage to reduce expenses and increase the bottom line. This not only benefits the business, but also the community by lowering emissions and reducing the company’s carbon footprint. But given the uncertainty surrounding government-sponsored grants, incentives and loan guarantees, businesses hoping to take advantage of these financial incentives to help them go green, should take action now before the incentives disappear.