The U.S. Green Building Council (USGBC) is calling on Congress to reject proposed budget reconciliation legislation that would repeal critical federal tax incentives and other initiatives that promote energy affordability, grid reliability and job creation.

“A vote to repeal these tax incentives is a vote to raise energy costs for millions of American households and businesses while discouraging billions of dollars of investment in the construction and real estate sectors, all at a time when we are seeing clear signs of a slowing economy and pinched pocketbooks.” Elizabeth Beardsley, senior policy counsel at the U.S. Green Building Council, said of draft legislation under consideration in the U.S. House of Representatives.

“Businesses need certainty to invest and grow,” Beardsley said. “This proposal instead pulls the rug out from thousands of homebuilders, real estate companies and others who have planned around using these tax incentives to make investments. If these drastic changes are enacted, projects will be canceled. Investment will slow. And the people who will lose out the most are workers in the building trades – the construction workers, electricians, heating and air conditioning contractors, and others in every state, across the country.”

The proposed Ways and Means reconciliation package would repeal, after this year (the end of 2025), two longstanding, bipartisan residential tax incentives used to encourage energy-efficiency investments. That includes the Sec. 25C tax credit for homeowners to make energy efficiency improvements to their houses, such as installing insulation or high-efficiency heating and cooling systems, and the Sec. 45L energy-efficiency home construction credit that offers homebuilders a tax credit for building high-efficiency new homes (with an additional year through Dec. 31, 2026, for houses under construction before May 12, 2025).

According to Treasury Department data, more than 2.3 million American households took advantage of the 25C homeowner efficiency improvement credit in 2023, taking an average credit of nearly $900. Meanwhile, homebuilders built nearly 350,000 new houses to the ENERGY STAR standard required for receiving the 45L homebuilder credit.

“This proposal to abruptly terminate the homebuilder’s credit, which has been in place since 2005, will only worsen the housing production crisis we are in. It is particularly unfair to the large and small homebuilders across the country who have invested time and money to build new homes to be eligible for the tax credit. These homebuilders are left holding the bag under this proposal, while the housing affordability crisis will worsen with fewer quality, efficient homes being built,” Beardsley said.

The Ways and Means bill would also initiate a faster phase-down of the Investment Tax Credit and the option for transferability of the credit that the real estate sector is widely using to install on-site clean energy. It would also repeal at the end of 2025 the tax credit for installing alternative vehicle fueling infrastructure that is popular in office, retail and multifamily housing projects.

Separately, the initial bill at House Energy and Commerce Committee would do irreparable harm to the Department of Energy and other agencies by rescinding funding for the Office of Energy Efficiency and Renewable Energy, which funds an array of research and private sector engagement programs, and the Federal Energy Management Program, which helps the federal government save billions of dollars annually in energy costs. The bill also rescinds unobligated portions of other prior appropriated funding at EPA related to the buildings sector, including EPA efforts aimed at helping U.S. companies navigate the transition to low embodied carbon construction materials and promote U.S. leadership in the field; State-Based Energy Efficiency Training grants; the Greenhouse Gas Reduction Fund (e.g. green banks); addressing air pollution at schools; Environmental Product Declaration assistance; and HFC phasedown, among others.

The House Transportation and Infrastructure Committee released its initial text last week, which includes rescission of unobligated funding at the U.S. General Services Administration (GSA) for high-performance buildings and demonstration of emerging technologies. If these funds – originally totaling over $3 billion — are ultimately taken back, that will put at risk dozens of projects across the country, including important land ports of entry that help manage the border, as well as courthouses, and reduce the ability of GSA to advance private sector building sector innovation. The House Financial Services Committee draft also includes damaging provisions, such as the cancellation of the highly successful housing retrofit program focused on improving resilience and energy efficiency.

“These programs are ultimately about positioning the U.S. to lead in the global economic opportunities of the future, while also helping businesses and households reduce energy costs,” Beardsley said.