Watching and Safeguarding Against Fraud and Abuse of Climate Subsidies

by | January 24, 2023 | Working for Justice Blog

On August 16, 2022, President Biden signed the Inflation Reduction Act into law, which included $370 billion in federal subsidies for electric vehicles, wind farms, and other clean energy technologies.

The law marks one of the biggest-ever U.S. initiatives to combat climate change. Relative to 2005 greenhouse gas emissions, the Biden Administration’s goal is a reduction of 50% to 52% by 2030.

However, as $370 billion gets injected into the energy sector, potential fraud may also be on the horizon, and the need for whistleblowers will inevitably increase.

What steps is the government taking to prevent fraud?

In the past, the distribution of electric vehicle credits was already met with fraudulent claims on an individual level, and the potential for greater fraud exists here.

John Podesta, President Biden’s clean energy adviser, has said that The White House has met with inspectors general from across the government in an effort to safeguard against fraud. As a result of this injection, the Internal Revenue Service is also expected to issue complex rules delineating who may qualify for the incentives and how distribution will take place.

Federal agencies are similarly concerned about the influx of money into their programs and are starkly aware of their limited resources for oversight. For example, the Department of Energy’s Special Report on Management Challenges for Fiscal Year 2023 states that the “new spending and loan programs introduce a greatly increased risk of fraud, waste, and mismanagement.” Further, the Department recognizes that there is insufficient oversight of “projects at the transaction level” and stressed the need to set aside sufficient resources to “ensure the Government and taxpayers are protected.”

The Department will see its budget more than double from $45.3 billion in FY 2022 to over $100 billion in FY 2023 and $336 billion in loan authorities under the Act, not to mention the additional $30.5 billion authorized by the CHIPS and Science Act.

Oversight is key

As new programs enter into the fray and existing programs expand, a lack of oversight can lead to numerous opportunities for fraud and waste to take place. For example, companies may attempt to falsify their tax returns to claim energy tax credits without entitlement. Without proper oversight, taxpayer money may be wasted on such fraudulent activities. Therefore, whistleblowers will become more important than ever before in this industry.

The role of whistleblowers

To support government efforts to prevent waste and fraud in these climate efforts, whistleblowers can prove incredibly valuable in protecting taxpayers. With the increasing wave of government-funded climate programs, whistleblowers can provide invaluable and critical information about how the industry operates and any potential wrongdoing they are witnessing.

By coming forward, whistleblowers can assist the federal government with addressing potential False Claims Act violations that may arise.

To ensure that federal funds are not misused for fraudulent purposes, whistleblowers can help us correct the path as much as we can.

Sanford Heisler Sharp consists of experienced and passionate attorneys with extensive experience representing whistleblowers. We advocate for whistleblowers and provide our support and counsel as they navigate the complicated process of trying to expose fraud. Please contact us to learn more.