This bill allow straight line depreciation over a 10-year period of energy efficient qualified improvement property. The bill defines energy efficient qualified improvement property as any improvement to a building that is nonresidential real property, or multifamily residential rental property, first placed in service more than 10 year before the enactment of this bill, and that is installed as part of the lighting system, the heating, cooling, ventilation, or hot water systems, or the building envelope. The improvement must meet specified performance and other requirements.
To amend the Internal Revenue Code of 1986 to allow 10-year straight 
line depreciation for energy efficient qualified improvement property, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Efficient Qualified 
Improvement Property Act of 2021'' or the ``E-QUIP Act''.

SEC. 2. DEPRECIATION OF ENERGY EFFICIENT QUALIFIED IMPROVEMENT 
              PROPERTY.

    (a) 10-Year Property.--Section 168(e)(3)(D) of the Internal Revenue 
Code of 1986 is amended by striking ``and'' at the end of clause (iii), 
by striking the period at the end of clause (iv) and inserting ``, 
and'', and by adding at the end the following new clause:
                            ``(vi) energy efficient qualified 
                        improvement property.''.
    (b) Straight Line Method.--Section 168(b)(3) of such Code is 
amended by adding at the end the following new subparagraph:
                    ``(H) Energy efficient qualified improvement 
                property described in subsection (e)(7).''.
    (c) Energy Efficient Qualified Improvement Property Defined.--
Section 168(e) of such Code is amended by adding at the end the 
following new paragraph:
            ``(7) Energy efficient qualified improvement property.--
                    ``(A) In general.--The term `energy efficient 
                qualified improvement property' means any improvement--
                            ``(i) to a building which is nonresidential 
                        real property, or multifamily residential 
                        rental property, first placed in service more 
                        than 10 years before the date of the enactment 
                        of this subparagraph,
                            ``(ii) which is installed as part of--
                                    ``(I) the lighting system,
                                    ``(II) the heating, cooling, 
                                ventilation, or hot water systems, or
                                    ``(III) the building envelope,
                            ``(iii) which meets the performance 
                        requirements of subparagraph (B),
                            ``(iv) which, in the case of an improvement 
                        described in subclause (I) or (II) of clause 
                        (ii)--
                                    ``(I) is audited, commissioned, or 
                                managed by a professional with a 
                                credential that is recognized by the 
                                Department of Energy through its Better 
                                Buildings Workforce Guidelines, or such 
                                other credential programs identified by 
                                the Secretary of Energy (following an 
                                opportunity for, and consideration of, 
                                public input), and
                                    ``(II) is subject to an ongoing 
                                operations and maintenance plan under 
                                such certification during the 
                                applicable recovery period,
                            ``(v) which, in the case of an improvement 
                        described in clause (ii)(III), the design and 
                        installation has been completed, observed, or 
                        approved by an individual qualified by 
                        industry-recognized professional credential 
                        programs in building envelope quality 
                        assurance, as identified by the Secretary of 
                        Energy (following an opportunity for, and 
                        consideration of, public input),
                            ``(vi) which is placed in service before 
                        January 1, 2026, and
                            ``(vii) with respect to which the taxpayer 
                        elects the application of this subparagraph.
                    ``(B) Performance requirements.--An improvement 
                meets the performance requirements of this subparagraph 
                if--
                            ``(i) in the case of lighting, it meets the 
                        lighting power allowances, densities, and 
                        control specifications in the prescriptive 
                        option of the International Green Construction 
                        Code (2018),
                            ``(ii) in the case of a unitary air-cooled 
                        air conditioner, it meets or exceeds Consortium 
                        for Energy Efficiency Tier 2, as in effect on 
                        January 1, 2019,
                            ``(iii) in the case of a unitary water-
                        cooled and evaporatively cooled air 
                        conditioner, it meets or exceeds Consortium for 
                        Energy Efficiency Tier 1, as in effect on 
                        January 1, 2019,
                            ``(iv) in the case of a unitary heat pump--
                                    ``(I) with a capacity of less than 
                                65,000 Btu per hour, it meets or 
                                exceeds Consortium for Energy 
                                Efficiency Tier 2, as in effect on 
                                January 1, 2019, or
                                    ``(II) with a capacity of 65,000 
                                Btu per hour or greater, it meets or 
                                exceeds Consortium of Energy Efficiency 
                                Tier 1, as in effect on January 1, 
                                2019,
                            ``(v) in the case of a variable refrigerant 
                        flow multisplit air conditioner or variable 
                        refrigerant flow multisplit heat pump--
                                    ``(I) with a capacity of less than 
                                65,000 Btu per hour, it meets or 
                                exceeds Consortium for Energy 
                                Efficiency Tier 2, as in effect on 
                                January 12, 2016, or
                                    ``(II) with a capacity of 65,000 
                                Btu per hour or greater, it meets or 
                                exceeds Consortium of Energy Efficiency 
                                Tier 1, as in effect on January 12, 
                                2016,
                            ``(vi) in the case of a boiler, it meets or 
                        exceeds Consortium for Energy Efficiency Tier 
                        1, as in effect on September 1, 2015,
                            ``(vii) in the case of a hot water heater--
                                    ``(I) that is gas-fired, it meets 
                                or exceeds Consortium of Energy 
                                Efficiency Tier 1, as in effect on June 
                                5, 2012, or
                                    ``(II) that runs on electricity, it 
                                has a Coefficient of Performance of 3 
                                or more,
                            ``(viii) in the case of a water-cooled 
                        centrifugal chiller package, it meets the 
                        prescriptive option of the International Green 
                        Construction Code (2018),
                            ``(ix) in the case of insulation for 
                        heating and cooling supply and return ducts, it 
                        meets the prescriptive option for duct 
                        insulation of the International Green 
                        Construction Code (2018) and its applicable 
                        Normative Appendix,
                            ``(x) in the case of roofing, walls, and 
                        associated insulation, it meets the 
                        prescriptive option for building envelope 
                        opaque elements of the International Green 
                        Construction Code (2018) and its applicable 
                        Normative Appendix,
                            ``(xi) in the case of piping insulation, it 
                        meets the prescriptive option for piping 
                        insulation of ANSI/ASHRAE/IES Standard 90.1-
                        2019,
                            ``(xii) in the case of windows, doors, and 
                        skylights, they meet the prescriptive option 
                        for building envelope fenestration and 
                        skylights of the International Green 
                        Construction Code (2018) and its applicable 
                        Informative Appendix,
                            ``(xiii) in the case of sensors and 
                        controls, it is a device that automatically 
                        controls the operation of other qualified 
                        equipment without manual operation of a switch, 
                        using technology such as motion or occupancy 
                        detection, infrared, ultrasonic, microwave, 
                        audio-based, image-processing, temperature, 
                        humidity, time-scheduling, bi-level, or demand-
                        response, and
                            ``(xiv) in the case of a variable speed or 
                        frequency drive, it is a drive--
                                    ``(I) added to adjust the speed and 
                                torque of an operational motor that 
                                powers pump, fan, exhaust, ventilation, 
                                air-handling, or compressor equipment, 
                                and
                                    ``(II) controlled automatically by 
                                a building automation system, process 
                                control system, or local controller 
                                driven by differential pressure flow, 
                                temperature or another variable signal.
                    ``(C) Updating of performance standards.--The most 
                recent version of each performance standard described 
                in subparagraph (B) shall be affirmed by the Secretary 
                (after consultation with the Secretary of Energy) and 
                shall apply with respect to any property for purposes 
                of this paragraph not later than the date that is 2 
                years before the date that the improvement to such 
                property begins.''.
    (d) Alternative Depreciation System.--The table in section 
168(g)(3)(B) of such Code is amended by inserting after the item 
relating to subparagraph (D)(v) the following new item:
        ``(D)(vi)..........................................       10''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2020.

SEC. 3. REPORT RELATING TO DEPRECIATION OF ENERGY EFFICIENT QUALIFIED 
              IMPROVEMENT PROPERTY.

    (a) In General.--Not later than 30 days after the date that is 3 
years after the date of the enactment of this Act, the Secretary of the 
Treasury, in consultation with the Secretary of Energy, shall submit to 
Congress a report on energy efficient qualified improvement property 
(as defined in section 168(e)(7) of the Internal Revenue Code of 1986).
    (b) Contents.--Such report shall include the following:
            (1) The number of times over such 3-year period energy 
        efficient qualified improvement property was placed in service 
        and treated as 10-year property under section 168(e)(3)(D) of 
        such Code.
            (2) A summary of the types of such energy efficient 
        qualified improvement property placed in service during such 
        period.
            (3) An estimate of the energy use savings, and reduction in 
        greenhouse gas emissions, attributable to such property.
            (4) An estimate of the number of jobs created which are 
        attributable to the enactment of the Energy Efficient Qualified 
        Improvement Property Act of 2020.
            (5) Any recommendations for updated efficiency requirements 
        for energy efficient qualified improvement property or rules 
        for the depreciation thereof.
                                 <all>
E–QUIP Act
To amend the Internal Revenue Code of 1986 to allow 10-year straight line depreciation for energy efficient qualified improvement property, and for other purposes.
Energy Efficient Qualified Improvement Property Act of 2021
E–QUIP Act
Rep. Schneider, Bradley Scott