Post-OBBB math: Energy efficiency still pays without 179D
- sherry8120
- Jul 10
- 2 min read
Day 3 of our week-long series on the One Big Beautiful Bill Act (OBBB) looks at one of the most economic ways to decarbonize your business: energy efficiency (EE).
🚨 The IRA’s energy efficiency tax credits are ending for commercial buildings as of July 2026
The IRA included a myriad of tax credits for residential and commercial energy efficiency upgrades – from insulation and windows to heat pumps and water heaters – that are being phased out.
For businesses, the relevant incentive (The Energy Efficient Commercial Buildings Deduction (179D)) will no longer apply for any buildings that start construction after June 30, 2026.
However, 179D was not easy for companies to access, leading to limited use
One key component that made 179D more difficult for operating businesses to utilize was that it required the building retrofit to reduce energy consumption by at least 25% versus the reference case and it had to be accessed by building owners.
While many businesses can benefit from ROI-positive lighting and HVAC retrofits, these rarely reduce total consumption by 25%.
The example below illustrates the efficiency opportunities for one customer’s offices and commercial warehouses across multiple states.
Using Rappel’s CO2-AIM model, we estimated significant building retrofit upgrades at each site, but only one reached the 25% threshold.
On top of the high threshold, many companies lease their facilities, so accessing these credits would have also required close collaboration with landlords.
Energy efficiency upgrades are still great starting points for decarbonization post-OBBB, often supported by state and local incentives.
Rappel typically finds 10-20% savings in energy costs and in carbon emissions through EE opportunities (as shown above). These actions average 3 – 4 year payback periods without relying on any federal credits.
State and utility incentives improve these economics further for a wide range of locations, as many utilities are mandated to fund electricity and gas efficiencies thorough their service territories (e.g., Ameren Missouri BizSavers program, Entergy Arkansas Commercial Energy Efficiency Program, AEP Texas Commercial Energy Efficiency Programs etc.).
👉 Takeaway: Energy efficiency still remains the first tool in value-driven decarbonization.
EE delivers direct savings, lasting emissions reductions, and fuel for additional decarbonization opportunities down the road. OBBB won’t change that picture for most businesses.
🔧 Need help navigating the post-OBBB world?
We work with financially-motivated companies to navigate decarbonization and operational challenges with specificity and affordability in mind.
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