Conserve Your Energy… and Money
Government policymakers are attempting to help small businesses become eco-friendly.
Americans’ gluttonous energy consumption has contributed to global climate changes, bloated prices and threatened shortages. Policymakers offer subsidies and tax breaks to help big businesses play their part in cleaning up the environment. Meanwhile, small businesses -- which consume 50 percent of the nation’s energy output – haven’t been offered the same financial rewards, and find environmental stewardship to be cost-prohibitive.
“When it comes to solving the energy crisis, small-business interests have long been ignored by policymakers,” says Byron Kennard, founder of the Center for Small Business and the Environment. Finally, that may be changing – to the benefit of the environment, and, to small businesses’ bottom lines.
In March, the U.S. Senate Committee on Small Business & Entrepreneurship held hearings on small business solutions for combating climate change. And, the House Small Business Committee is considering drafting a small business energy bill in the next few weeks to expend energy conservation resources and provide incentives for reducing their energy footprint.
Hopefully, this bill will bring some much-needed relief. A June 2006 survey by the National Small Business Association (NSBA) determined that 75% of small businesses are now burdened by persistently rising energy costs. Naturally, the majority agrees that reducing energy costs would boost their profitability.
“Energy efficiency, environmental awareness and green manufacturing may sound like something for the hippies in Berkeley,” says Molly Brogan, manager of government affairs for the NSBA. “But many small businesses are saving significant amounts of money by ‘greening up.’” The Environmental Protection Agency (EPA) estimates that small firms can save 20% to 30% on their energy bills through simple off-the-shelf energy efficiency upgrades.
Congress Focuses on Revitalizing Small Business Energy Policy
Two years ago, Congress passed The Energy Policy Act of 2005, creating Energy Star, an EPA-managed program that labels products as energy efficient and provides information on how to reduce energy use. A key component of this nationwide program was designed to provide technical support and web-based resources to facilitate small businesses’ energy saving efforts. However, the NSBA survey revealed that only 60% of small business owners were familiar with the Energy Star label, and only 33% had invested in energy efficient programs.
The EPA has recently come under fire from Democratic and Republican lawmakers alike for its passively run program. At the March hearings, Senators John Kerry (D-MA) and Olympia Snowe (R-ME), Chairman and Ranking Member, respectively, of the Senate Committee on Small Business & Entrepreneurship, blasted the EPA for the administration’s inadequate efforts to carry out the small business provisions of the Energy Star legislation. In a subsequent letter to EPA Administrator Stephen Johnson, Senators Kerry and Snowe further voiced their frustration. “The administration must play an active role in providing small businesses with the technical assistance and resources necessary to improve energy efficiency… A staff of just two employees and a bare bones budget of $1 million is not an adequate commitment to America’s small businesses.”
Another provision of the Act required the EPA and the Small Business Administration (SBA) to “establish, maintain and promote a Small Business Energy Clearinghouse.” To date, the Clearinghouse has not yet been created – something that Senators Kerry and Snowe also criticized at the March hearings.
Congress is taking other steps to address small business energy needs.Earlier this spring, a bi-partisan group of Senators introduced legislation to extend and enhance energy efficiency and solar energy tax incentives that the Energy Policy Act of 2005 had provided to businesses and consumers, including the following new provisions:
· An extension of the tax deduction for energy efficient commercial buildings through 2012;
· An extension through 2011 of tax credits of certain residential energy efficient equipment, which are available to businesses.
The House Small Business Committee is currently reviewing policy recommendations from small business advocates to:
· Expand funding for, or at least limit cuts to, the Energy Star Small Business program;
· Strengthen the SBA’s role in creating and maintaining the Small Business Energy Clearinghouse;
· Authorize the Small Business Development Centers to help companies become more energy efficient;
· Develop special provisions in SBA programs for alternative energy manufacturers, distributors and installation and service companies;
· Encourage National Rural Electric Cooperatives to focus on energy efficiency and renewable products.
States Expend More Energy on Small Businesses
Fortunately, many small business owners are currently finding valuable help closer to home. “With the increased concern over energy supply and pricing, and the obvious implications for small businesses, many states have been enacting programs to offer business owners technical or financial assistance relating to energy conservation and efficiency,” notes David Weiss, executive director of The Energy Solutions Center, a non-profit organization that promotes energy-focused technology commercialization and market development.
A particularly innovative state program is On-Bill Financing, which enables small businesses to finance eco-friendly savings improvements such as new energy-efficient lighting, refrigeration and HVAC retrofits, compressed air systems, and solar energy installations—without the burden of up-front capital. Owners receive an interest-free or low-interest loan and pay it entirely through their regular utility bills. Once the energy efficiencies kick in, the business repays the loan by continuing to make payments at the original utility rate. When the “loan” is repaid, the customer then begins to save money. The program has been successfully implemented by utilities in Connecticut, Rhode Island, Massachusetts, New Hampshire and California (Southern California and San Diego). Similar programs are being considered by utilitiesin Pennsylvania and Nevada.
“Cash flow is the biggest barrier for small businesses to invest in energy efficiency,” notes Hank Ryan, executive director of Small Business California. “On-Bill Financing eliminates this barrier and provides utilities with a cost-effective means to support conservation measures for small businesses.”
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John Arensmeyer is Founder and CEO of Small Business Majority, a national small business advocacy organization.
