Trying to Save the Wrong Kind of Green
When President Joe Biden signed into law the misnamed Inflation Reduction Act (IRA), the legislation was immediately touted as the largest investment ever in green energy. It favored renewables over fossil and nuclear power as part of the administration’s Green New Deal agenda, but it was not the first time the government picked winners and losers in the energy industry. The American Recovery and Reinvestment Act of 2009 (ARRA) laid the groundwork for federal green energy spending and like the IRA, neglected to calculate the hidden costs that followed its adoption.
H.R. 1, the One Big Beautiful Bill Act, as passed by the House of Representatives on May 25, 2025, took steps to rebalance spending on federal energy programs by eliminating hundreds of billions of dollars in green energy programs, including loans, grants, subsidies and tax credits, which have been a breeding ground for waste, fraud, abuse, and mismanagement. For example, Citizens Against Government Waste’s 2015 report spotlighted the mismanagement of ARRA grants by solar panel manufacturers Solyndra and Abound Solar, which filed for bankruptcy after receiving a total of $605 million through the Department of Energy’s Loan Guarantee Program. The two companies are on a much longer list of government-subsidized failures, including battery recycling company Li-Cycle, which received $475 million from the Department of Energy two days before the 2024 election and suspended operations in May 2025. These abuses of taxpayer funds to promote green or clean energy highlight the problem of promoting a political agenda without considering the financial consequences.
Fraud and abuse in other energy programs include a 2020 Treasury Inspector General for Tax Administration (TIGTA) report, which found that 10 energy producers had failed to substantiate approximately $894 million for the 45Q tax credit provided to companies that capture and store carbon dioxide (CO2) and other carbon oxides. Claimants failed to submit verification required as proof they captured any CO2, and the Internal Revenue Service later confirmed that $531 million in these carbon capture tax credits were fraudulently claimed. One of the reasons for this substantial fraud is that carbon capture tax credits may encourage increased emissions. The more carbon a producer emits, the more federal money it can get.
The selectivity and complexity of renewable energy programs contribute to corruption and fraud. A May 2, 2024, Cato Institute article noted, “The tax credits complement other subsidies and blending requirements in the renewable fuel standards program, creating a complex web of lucrative programs administered by multiple agencies with poor oversight and insufficient interagency cooperation.” An April 2023 TIGTA report uncovered a biofuel tax credit fraud scheme through which more than $500 million was stolen from taxpayers.
With many available and well-established energy sources, there is little reason for the federal government to manipulate the market by establishing preferences for a particular type of energy, especially given the growing need for data centers to support artificial intelligence. Localities should be allowed to use the energy source that suits them. Tax and spending programs that prioritize specific energy sources should be phased out, which is being done in the House version of the One Big Beautiful Bill. That will save money and stop the government from picking winners and losers in the energy industry.
