As healthcare systems continue their bid to “first, do no harm,” more attention is being placed on the organizations’ broader impact on their communities, including the environment and air quality. It is estimated that the global health care industry is responsible for two gigatons of carbon dioxide each year, or 4.4% of worldwide net emissions. And according to a September 2019 report by Health Care Without Harm, over half of the industry’s emissions (representing an estimated 2.2% of the worldwide net emissions) can be attributed to the health care industry’s use of energy. The energy-intensive nature of the industry correlates with the often 24/7 use of health care facilities and the high-tech, life-saving equipment.
The industry’s transition to renewable energy therefore represents a significant opportunity in curbing worldwide carbon emissions. But more importantly, it represents an opportunity to improve health and wellbeing. According to the World Health Organization, an environmentally sustainable health system is one that improves, maintains, or restores health, while minimizing negative impacts on the environment and leveraging opportunities to restore and improve it, to the health and well-being of current and future generations.
A transition to renewable energy can also bring a myriad of other benefits to a health system, aside from the improved health and environment. Specifically, by sourcing energy from multiple sources, an organization could have more energy independence as it will not be relying upon a single or small handful of fossil fuel providers. Additionally, renewable energy contracts often include lengthy terms of 10 to 20 years, meaning the health system may be able to lock in pricing for a longer period of time, reducing price volatility and cost. The multiple sources of energy combined with electricity storage can also further insulate the organization from disasters and provide more of a resilience of operations. Finally, the benefit to employee recruiting cannot be underestimated. A majority of workers think their employer is not doing enough to be more sustainable and tackle climate change, and most workers say they would be more likely to work for a company with robust environmental policies. The reason for this is simple: an employer that demonstrates greater sustainability is more likely to care for its employees, to provide more meaningful work, and realizes that such work will make its employees more satisfied and engaged.
Such a transition can require significant capital investment, dedicated personnel, and other resources. However, the passage of the Inflation Reduction Act (IRA) and all other public and private credits and incentives currently in place help to reduce the monetary risks associated with such a transition in the United States and increase the return on investment. The IRA, in particular, greatly expands the reach of clean energy tax credits, including two new delivery mechanisms – elective pay (otherwise known as “direct pay”) and transferability – that enable non-profit organizations and other entities to take advantage of these tax credits. In fact, the U.S. Department of the Treasury and the Internal Revenue Service recently issued guidance on key provisions of the IRA with respect to direct pay and transferability. The IRA’s direct pay provisions allow non-profit health systems to receive elective payments for 12 clean energy tax credits, including the major Investment and Production Tax credits, as well as tax credits for electric vehicles and charging stations.
Although there are many different renewable energy investments that will help health systems achieve greater sustainable operations and that may qualify for incentives and tax credits, several kinds of projects have already been successfully implemented by multiple health systems throughout the country. Those projects include solar photovoltaic (PV) panels, wind turbines, biomass boilers, geothermal, biogas, microgrids, and battery-powered generators. And while the transition can be accomplished in piecemeal fashion, it is certainly possible to make a full transition to energy independence in a relatively short period of time, as was the case for the Gundersen Health System, headquartered in La Crosse, Wisconsin, when it announced in 2014 that it had become the first healthcare system in the United States to produce more energy than it consumed by relying on many of these sources of renewable energy. And Gundersen’s transition occurred before many of the incentives being offered, today. Ultimately, however, any step toward greater sustainability can help to improve air quality, health and wellbeing and furthers our obligations as responsible stewards of our communities and environment.
Contact one of Husch Blackwell’s many renewable energy attorneys to discuss how your healthcare system can reduce its carbon footprint by utilizing renewable energy in its overall energy portfolio and to what extent it can take advantage of the Inflation Reduction Act tax credits and other governmental incentives in connection with such an investment.