Government Incentives For Going Green

Developing sustainable business practices can be expensive, but there are many incentives and grants offered by the government available. Some opportunities vary state-by-state, and others are established federally. It can be difficult to know where to start researching, but this article is here to help you find potential options. 

1. Tax Incentives & Deductions

First, consider tax incentives and deductions for going green. A few of the benefits for taking action include lower initial investment costs, reduced energy bills, and even lower insurance premiums. Investing now can get your business ahead of environmental compliance regulations and build customer loyalty.

The Inflation Reduction Act (IRA) is a landmark piece of U.S. legislation passed in August of 2022 that addresses climate change. One of the key areas of the IRA is its support for clean energy, sustainability, and green technologies through tax incentives and deductions. They have established or extended many major tax credits for individuals, families, or corporations. Here are a few opportunities included for businesses: 

• Investment Tax Credit (ITC): This allows for businesses to claim a tax credit for the installation of renewable energy systems, such as solar panels, wind turbines, and geothermal systems.
• Production Tax Credit (PTC): This is a per kilowatt-hour (kWh) federal tax credit for electricity generated by qualified renewable energy resources.
• Advanced Manufacturing Production Credit: A financial incentive for companies that manufacture renewable energy equipment in the U.S. (e.g. solar panels, wind turbines, batteries, and electric vehicle parts).
• The Energy-Efficient Commercial Building Tax Deduction: Businesses can deduct the costs associated with energy-efficient improvements to commercial buildings (e.g. HVAC, lighting, or insulation) with this tax deduction. Learn about more energy related tax credits covered by the IRA here.
• Clean Fuel Vehicle Tax Credit: Businesses purchasing electric or hybrid vehicle fleets are covered by this tax credit. It applies to both commercial and passenger vehicles. Learn more about related EV tax credits here.
• Alternative Fuel Vehicle Refueling Property Credit: This is a tax incentive for purchasing or converting vehicles to use alternative fuels, or for installing infrastructure to support those vehicles (e.g. EV charging stations).

2. Grants & Subsidies

Secondly, there are many grants and subsidies offered by the government to research or develop sustainable technologies. The two federal agencies that provide the most funding are the Department of Energy (DOE) and the Environmental Protection Agency (EPA). These grants will require your business to write a proposal outlining the project timeline, budget, methods, and expected outcomes. You will also be required to prepare compliance documentation regarding your business and explanations for how your project will better benefit the environment or community.

The DOE was established in 1977. The agency manages the United States' nuclear infrastructure, administers the country's energy policy, and funds scientific research in the field. Here are a few of the grants they offer businesses:

• Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs: programs that support small businesses researching and developing innovative technologies, including those related to clean energy, energy efficiency, and environmental sustainability. Includes three distinct phases that guide innovations from concept to commercialization. 
• Advanced Energy Project: established by the American Recovery and Reinvestment Act of 2009 and renewed and expanded under the Inflation Reduction Act of 2022. It funds high-risk, high-reward energy projects focusing on innovations in energy technology that could radically change energy production, storage, and consumption.

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The EPA was established in 1970, and this federal agency develops and regulates environmental policies, educates the public on environmental issues, conducts research, and grants funds for those helping to accomplish their mission. They offer many grant programs, but here are a few your business can take advantage of:

• Small Business Innovation Research (SBIR) Program: This program funds small businesses to develop and commercialize innovative environmental technologies in broad focus areas which include clean and safe water, air quality and climate, land revitalization, homeland security, sustainable materials management/circular economy, safer chemicals, and risk assessment.
• Brownfields Grants: This program funds grants to businesses working to redevelop brownfield sites (previously contaminated or unused properties). The money can be used for site assessments, cleanup, and preparing the land for future use.

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3. State Incentives & Grants

Be sure to make the most of every benefit the government offers. On top of considering the prior federal incentives and grants, there are many state-varied options available. For example, solar energy installation has different tax credits by state. The California Solar Initiative Tax Credit offers a 30% rebate while the New York Solar Energy System Tax Credit offers a 25% rebate. If you’re unsure how to begin researching the differences, UtilityGenius is a great resource. The platform offers a user-friendly interface that allows users to search for program information by state, program name, or zip code. The database provides details for a range of financial incentives such as rebates, grants, loans, and tax credits aimed at promoting energy efficiency and renewable energy projects. 

4. Application Tips

Applying for tax credits and grants can be complex, however, they’re worth researching if your business is going green. Here are a few things to remember when beginning the process:

• Understand Eligibility Criteria: Start by identifying the specific programs available at the local, state, and federal levels for your business. Ensure you’re targeting the ones relevant to your industry. Some incentives require you to apply during specific windows or adhere to strict compliance. 
• Stay Informed About Changes: Government policies around sustainability funding change frequently. Stay updated on new incentives or changes to existing programs through government websites or professional associations. 
• Leverage Online Resources: Although it can feel overwhelming to research these incentives, know that there are many government websites or databases such as UtilityGenius that are available to guide you. Always check that they are reputable and up-to-date.
• Hire Professionals:  If you're applying for larger tax credits or grants, hiring someone with experience can significantly increase your chances of success. There are many consultants and accountants who can ensure you are meeting all of the requirements and save you time.

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The economy is making more strides towards sustainable and eco-conscious practices every year. There are a lot of considerations involved when choosing investments for your businesses. However, it’s important to remember how these choices can provide long-term benefits. Governments are pushing for change with tiger regulations and customers are becoming more informed about environmentally conscious brands they’d like to support. Cut down your company’s costs in the long run and push to differentiate yourself from your competitors. The key is to make the most of your money by researching government incentives and grants to achieve these goals. 

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