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Going green • The Economy • Material costs

Going green: Regs will reward energy and water efficiency
The economy: Cheaper oil eases inflation and interest rates
Materials costs: Steel up short term, easing long-term

Going green
Get a tax deduction for cutting your business’s energy use ...
Up to $1.80 per square foot of space for the cost of improvements that cut overall energy use by 50% or more. For lesser energy savings ... 16.67% to 50% ... the maximum write-off is 60¢ per square foot of space. By late fall, the Energy Dept. will issue guidelines telling businesses how they must calculate the energy savings to qualify for the write-off. Qualifying improvements include energy-efficient HVAC systems, boilers, lighting, windows, etc. Improvements must be made before December 31, 2007.

By early next decade, federal regs on carbon dioxide emissions are likely, probably pairing pollution caps with a credit-trading scheme.
Calif.’s new legislation is another big leap in that direction. The new Golden State law requires that carbon dioxide pollution levels be cut by 25% by 2020. That will hit manufacturing, electric utilities, and oil firms hard, though it’s also likely to spawn some innovations ... technologies for clean energy, more-energy-efficient production, and so on.
The state is sure to adopt a pollution-credit-trading scheme akin to the one now in the works for Northeast and Mid-Atlantic states.

Water-efficient products will get a marketing boost next year:
A voluntary "WaterSense" label from EPA. The environmental agency hopes it will be as well received as the similar Energy Star label on energy-efficient household appliances and other products since 1992. The blue and green logo will first appear on irrigation equipment. Later, it will show up on toilets, faucets, valves, and other residential and commercial products that use 20% less water than comparable products.

Mercury woes aren’t limited to the safety of dental fillings, though that has been the focus of recent publicity and government reports.
Also a concern to regulators: Pollution from dentists’ offices and other small users. More than a third of the mercury in wastewater comes from dentists’ offices. For now, the EPA and state regulators are content with voluntary control programs. But that may not last.
Storage of the growing stockpiles of the toxin is also a worry. States don’t want to be stuck with the stuff collected through recycling. And the federal government is already sitting on nearly 6,000 metric tons of mercury, some collected after big industrial use of it was regulated.

The economy
Lower energy prices will sustain the easing trend in inflation in coming months. The 18% drop in oil costs from their peak in mid-July will temper the Consumer Price Index by lowering costs for fuels, transportation, and utilities ... an element of housing costs.
The Federal Reserve can rest easy and leave interest rates alone, probably well into next year, barring another spike in energy prices. Rising wage costs remain a worry, but we expect them to slow gradually.

Materials costs
Expect tight controls on duty waivers for imported steel, lumber, cement, and other items in big demand for post-Katrina rebuilding. Domestic vendors of such goods are lobbying the Commerce Department hard to make sure the waivers don't trigger floods of imports nationwide.
More antidumping cases will raise prices for various chemicals, steel products, textiles, office paper, and other supplies. Slower growth in the U.S. economy will cut order volumes for domestic manufacturers of these goods, prompting them to seek more import protection next year.
But rising U.S. iron output should help contain steel price gains over the longer term. Starting next year, domestic producers of iron ore plan to reopen existing mines in Michigan, Minnesota, Utah, and Tennessee. They're confident that global demand for steel will be relatively strong in the near future, spurred by growing needs in China and elsewhere.