On Clean Air Day, whistleblowers needed to ensure IRA implementation

Today, the world’s Fourth Annual Clean Air Day, we celebrate the United States’ historic investment in protecting our climate.  Just three weeks ago, President Biden signed the Inflation Reduction Act of 2022 into law.  The Act tackles many major issues, including drug prices for seniors and funding for IRS enforcement, but chief among them is climate change.

The law invests $369 billion in energy and climate reform, making it the largest federal clean energy investment in U.S. history.  In 2021, President Biden set a goal of reducing U.S. greenhouse gas emissions to 50% below 2005 levels by 2030 (i.e., to about 3.3 billion metric tons annually).  The IRA almost gets us there.

It does so primarily by offering billions of dollars in tax credits—to industry to produce more renewable energy and to American households to transform their energy use and consumption.  For example, the law provides for $260 billion in tax credits to incentivize generation of solar, wind, hydropower, and other sources of renewable energy.  These subsidies are available for both the production of renewable energy and the manufacturing of specific parts essential to renewable projects, such as wind turbines or solar panels.

The overall goal is to make it cheaper to build new green energy production sites than fossil fuel plants.  Similarly, the law provides for $80 billion in rebates for consumers—to provide incentives for the purchase of electric vehicles, more-efficient heat pumps and water heaters, and installation of solar panels.

Experts estimate that the IRA’s $369 billion in investments could drive emissions from about 5.6 billion tons annually (2021 levels) to 3.8 billion by 2030.  But these goals will only be met if these investments actually go towards renewable energy production, electric vehicles, and solar panels.

As we explored earlier this year, experience during the COVID pandemic has shown that well-intentioned federal spending programs, without appropriate safeguards, are ripe targets for fraud and abuse.

Renewable energy programs are no exception.  In fact, existing programs to promote production and use of renewable energy are already known hotbeds for fraud.  For example, in 2020, the Department of Justice secured the conviction of California businessman Lev Dermen for his role in a $1 billion renewable fuel tax credit scheme to claim Renewable Fuel Standard (RFS) credits issued by the EPA and IRS tax credits for biodiesel fuel that did not exist, thereby defrauding taxpayers out of hundreds of millions of dollars and undermining these important climate protection programs.  Dermen’s conviction followed the entry of guilty pleas by four others in relation to the scheme.

Several individuals blew the whistle on Dermen’s fraud and offered important testimony in shutting down this flagrant scheme.

With this increased spending on renewable energy, energy alternatives, and subsidies for consumers, whistleblowers are necessary and will play a vital role in defending IRA-funded climate programs.

This article was originally posted as part of the “Fraud by the Numbers” series for the Fraud in America website by Taxpayers Against Fraud Education Fund, a public interest, non-profit organization dedicated to fighting fraud against the government by working to protect whistleblowers and strengthen whistleblower law.