The Latest Government Programs and Incentives Shaping the Roofing Industry

The need for sustainable development has never been more pressing. Looking through a solution-oriented lens, the building construction industry, which is a major contributor to the global carbon footprint, is capable of driving positive change. To help mitigate the impacts with urgency, the federal government has enacted a range of national policies designed to promote energy efficiency and reduce greenhouse gas emissions in the built environment. The newest initiatives include various tax incentives and focused funding and grant programs that promote the adoption of updated building energy codes.

With a concentrated effort on reducing building energy use, the spotlight turns to roofing professionals as key players in the action plan. By getting up to speed on the latest government programs and initiatives, roofing industry professionals can contribute to global sustainability targets while increasing their clients’ overall job satisfaction.

Tax Benefits to Incentivize Energy-Efficient Buildings and Homes

Several federal initiatives support carbon emission reductions by offering tax incentives to home and building owners who voluntarily invest in energy efficiency upgrades and improvements. Some of the most lucrative tax credits include:

· 179D Commercial Building Energy Efficiency Tax Deduction:The revised 179D has scaled its incentives so that taxpayers can receive a deduction of $2.50 per square foot for achieving 25 percent efficiency improvements in site energy use. The incentives increase by $0.10 for each additional 1 percent improvement, up to a maximum of $5.00 per square foot.The savings are measured over a 12-month period before and after energy-saving measures are installed. Roof improvements can be a critical component and source of energy savings for 179D-qualifying projects.

· 25C Residential Efficiency Tax Credit: This home energy tax credit provides a yearly return of up to 30 percent on the purchase and installation of insulation and air sealing materials in residential upgrades (with a cap set at $1,200). Additionally, the program covers home energy audits up to $150. Residential energy efficiency may be an opportunity for roofing professionals that already serve the existing single-family home market.

· 45L New Energy Efficient Home Credit: The newly amended Section 45L offers a tax credit to eligible contractors for new or substantially reconstructed homes meeting ENERGY STAR or the DOE’s Zero Energy Ready Home (ZERH) program requirements. Eligible single-family and manufactured homes can qualify for a $5,000 tax credit, while multifamily dwelling units in ENERGY STAR-eligible buildings that meet ZERH criteria can receive a $1,000 tax credit. The 45L credit is likely to increase demand among homebuilders for energy-efficient products and the trades responsible for their installation.

· HOMES Act & Electrification Rebate Program: TheDOEhasapproved state rebate programs like the HOMES Act that extend tax credits for performance-based whole home efficiency upgrades (applicable to both single and multi-family homes). Similarly, the DOE’s Electrification RebateProgram offers rebates for home electrification upgrades, including insulation and air sealing materials. These rebates are subject to specific conditions and cannot be combined with other federal grants or rebates, except for the 25C Residential Efficiency Tax Credit. The rebate programs will be administered at the state level and roofing professionals should monitor for announcements throughout 2024.

These new and modified incentive programs underscore the federal government’s goal of promoting energy-efficient building strategies and upgrades. This brings opportunity to the roofing industry. By leveraging the natural replacement cycle of roofs, roofing professionals make the case for an energy-efficient roof replacement. Supporting this approach, a coalition of insulation trade associations commissioned a third-party-facilitated study that quantified the lifetime energy savings and carbon emission reductions that could accrue by completing code-compliant roof upgrades. The study revealed that envelope insulation upgrades can help achieve 10-45 percent energy savings in existing homes and energy-efficient roof replacements can result in 2-11 percent energy savings in commercial buildings, depending on various factors like climate zone and building type.

Aligning these findings to the mission of future-proofing the built environment, roofing professionals can encourage their clients to incorporate roof replacements as part of their larger action plan. In doing so, clients can reap the financial benefits of applicable tax credits while reducing their energy use.

Investing in Energy Efficiency Through Federal Grant Programs

In addition to tax benefits, the federal government has rolled out grant programs to make efficiency improvements and clean energy accessible to non-privatized buildings like schools and low-income households. While each program has different specifications, they all aim to reduce carbon emissions through the implementation of energy efficient building improvements. The federal grant programs that roofing professionals should be aware of include:

· Renew America’s Schools Grant Program: A first-of-its-kind investment,the DOE launched this $500 million competitive grant to help fund clean energy building improvements in K-12 public schools across the country. The flagship program evaluates upgrades that will improve building operations at lower costs, such as insulation and roof upgrades. The first round ($80 million) was announced earlier in 2023 and it is safe to assume that the remaining funding will be made available in stages over the next 3-4 years.

· Solar for All Award through the Greenhouse Gas Reduction Fund: The EPA’s Solar for All competition is designed to expand the number of low-income and disadvantaged communities primed for solar investment, which will give eligible entities access to affordable, resilient and clean solar energy. Notably, this $7 billion program will focus on rooftop solar. Awarded projects can include the costs of necessary improvements to the roof (including replacement) and other building envelope components to deploy solar.  

Federal Funding Pushes for Adoption of Latest Energy Codes

Finally, it makes sense that modern building energy codes largely drive the progress made toward a more sustainable built environment. To draw attention to the benefits of adopting the latest energy codes and promote their application, the federal government has introduced several groundbreaking funding opportunities. Some of the key pieces of legislation for roofing professionals to be aware of include:

· The Bipartisan Infrastructure Law: The Infrastructure Investment and Jobs Act includes $225 million in funding to enable the cost-effective implementation of updated building energy codes. This funding will be available to state agencies and local jurisdictions through a competitive grant process over five years and will ensure buildings meet the latest standards for energy efficiency. This in turn will reduce greenhouse gas emissions and lower energy bills for American families and businesses.

· Inflation Reduction Act (IRA) Funding: The single largest investment in climate and energy in our country’s history, the IRA provides $1 billion in funding to eligible states and local jurisdictions to adopt traditional and innovative building energy codes. In turn, the U.S. can make strides toward decarbonizing the existing building stock. Notably, $330 million is allocated to entities that use the resources to improve existing codes to meet or exceed the 2021 IECC and ASHRAE 90.1. The remaining $670 million is designated for the implementation of stretch building energy codes or standards that align with or exceed the Zero Net Energy performance index outlined in the 2021 IECC.

Looking Ahead

Our country’s economic and political landscapes, which have a direct impact on the policies enacted to address climate change, are constantly evolving. But there’s one thing that’s for sure. Roofing professionals have the opportunity here — it starts with staying informed on the latest government programs and incentives that are shaping the industry.

About the Author: Justin Koscher is the president of the Polyisocyanurate Insulation Manufacturers Association (PIMA). For more information, visit polyiso.org.