The Necessity, and Tax Benefits, of Going Green
People ask me “ Why is your company named ‘ Energy, Water and Taxes, LLC ’ ? How do taxes correlate with Energy and Water efficiency ? ” The answer is that taxes have always played a critical role in world history. Taxes are ubiquitous. Taxes are your largest variable expense. And taxes are an integral part of the Go Green Revolution for two reason. First, the Go Green movement is being economically driven by the need to reduce Energy and Water expenses in a tough global economy. The economic rationale for Green is to improve margins and Cash Flow by reducing expenses. Reduce your taxes and you have cut your largest single variable expense. Secondly, tax incentives are a key component of all Energy and Water retrofits. Generous State and Federal tax credits substantially improve the Return on Investment for Green projects. Tax Credits for Green are a critical part of the financial equation for enhancing and accelerating the profitability of Green investments.
The following trends will creep, and then gallop, into the world markets, and your Life:
- Cap and Trade legislation from U.S. Congress that institutionalizes the global trading of Tax and Carbon Credits. Renewable Energy Certificates will attract investors and speculators alike.
- Actively traded liquid markets for Energy Bonds and Green IPOs, where global capital markets finance Green investments so as to reap both profits and tax benefits. Liquid trading markets will flourish for both Equity and Debt.
- Energy Funds, where investors garner tax benefits like tax-free dividends and interest from Green investments. “Green Investing” will become The Next Big Thing.
- An expansion of Green Credit Facilities, where private capital finances Green projects and participates in the Energy and Water savings. Banks and Institutions will follow.
- A continual march towards Green becoming Code, where property owners are confronted with mandates and phase-in periods. This is not theoretical. This is already happening at both the State and Federal levels. Failure to comply will result in fines and possible shut-downs, leading to higher operating costs and reduced profit margins.
- A financing model where Landlord and Tenant collaborate in Green investments and share in the savings.
- The Carrot and The Stick – Public policy will be driven by Tax Incentives for Going Green; and penalties, fees, fines, surcharges and excise taxes for not Going Green. Historically, tax policy is always used by Governments as either an incentive or a penalty.
- The politicization and internationalization of Green. As the recent conference in Copenhagen proved, Green is now a “push and pull” consensus that is global, and building momentum. Nations will be pushed and pulled into Going Green. Non-conformists will be pariahs, and penalized in both financial and non-financial ways.
- New inventions and technologies that will increasingly make Green a compelling and common-sense investment with an attractive ROI. Not Going Green will become economic suicide and a bad strategic business decision.
- The EPA will be granted vastly expanded regulatory authority. “ Going Green ” will be mandatory, and expensive for those who do it under duress. The message is clear: Proactive Green will reap the benefits of market leaders, while Reactive Green will suffer the financial and non-financial penalties of market laggards.
- Green Tax Credits will be reduced. As Governments increasingly enact legislation that mandates Green, why would these same Governments continue to hand out tax goodies ? Why reward the market laggards when they are going to be forced to Go Green anyway ? The Stick will replace today’s Carrots. Today’s Green Tax Credits are incentives for those who act now. Get proactive on Green right now, while there are more carrots than sticks.
- Going Green is a public-relations boon. The polling is very clear on this: The public rewards Green businesses and ostracizes the “polluters.” Long-term Branding will be affected – Positively or adversely.
Job # 1 for you is to recognize which way the wind is blowing, and to adapt. Green is here to stay. Green will dominate the 21st century. Increasingly, Green will become legislative mandates and Executive Orders. On 12/07/09, The White House recently issued an official press release stating that it intended to give the EPA expanded powers for “Command and Control” in the areas of Green compliance and enforcement. “Command and Control ” means that central governments issue dictats. Get ready for Green becoming Code. The EPA will lead the charge and BOG ( The “Bureaucracy of Green” ) will trickle down to the State and local level and bog down your business much like The Sarbanes-Oxley Act. Understand that Green is a mega-trend. Get with the program and become a market leader … or your business and/or property will suffer. If you don’t Go Green your business and/or property won’t be competitive in the marketplace because it will be at a disadvantage to those who are reaping the cost-savings and tax benefits of Going Green. For those who do not get onboard the Green train …a slew of new regulations, tariffs and taxes will either erode your margins and market share, or run you right out of business. Going Green is a game-changer. Adopt Green as a strategic business philosophy for reducing expenses and garnering tax benefits. Benefit from this paradigm shift to Green, versus becoming a victim of it. Green is a global wave. Ride it, or be swept aside by it.
One last point: Making an investment in Going Green generates positive cash flow from Day 1. It is a myth that Green costs. Going Green pays because (quantifiably and verifiably) Energy and Water savings exceed the cost of financing the project. Investigate the facts and finances of Going Green and you will learn that Going Green is a smart, profitable and necessary investment in your business and/or property. Consider Green as your required retooling for the 21st Century. There are also economic benefits that accrete to a business and/or property from the public relations value of Green. Go Green now and reap cost-savings, tax benefits, and positive Branding. Go Green late and suffer higher costs, tax penalties and adverse branding.
Fraser Allport is the owner of Energy, Water and Taxes, a green company that focuses on helping businesses lower their bills through the use of green technologies. To learn more about Fraser, visit his Web site or click here to read more about Fraser on BrowardNETOnline.com.
Related posts:
- Emerging Green: A new weekly column on BrowardNETOnline.com
- Tips to consider before taking your business green
- More tips to reduce water/energy bills
- Getting green with the ten-minute tax tune-up
- What Happens When Green Becomes Code?
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Posted by Andrea Freygang on Jan 3 2010. Filed under Broward County, Emerging Green, Federal Government, Fort Lauderdale, Hallandale, Local news. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry
