The US Department of Energy seems ready to halt financing for two large carbon capture facilities that were initially slated to receive over $1 billion in federal grants, as indicated by a project list released by the department that was acquired by MIT Technology Review and is circulating among government bodies.
One of the initiatives is the South Texas Direct Air Capture Hub, a facility that Occidental Petroleum’s 1PointFive intended to establish in Kleberg County, Texas. The other is Project Cypress in Louisiana, a partnership among Battelle, Climeworks, and Heirloom.
The list contains a “latest status” column, featuring the term “terminate” next to the approximately $50 million award amounts for both projects. These correspond to the initial allocation of Department of Energy (DOE) funding for each project. As per the original announcement in 2023, the initiatives could have been granted $500 million or more in total as they progressed.
It is unclear if the cancellation of the initial grants would imply that the entire funding would be rescinded.
“It could signify nothing,” states Erin Burns, executive director of Carbon180, a nonprofit supporting the removal and repurposing of carbon dioxide. “It might indicate a renegotiation of the grants. Or it might mean they’re fully cut. But the ambiguity certainly doesn’t favor projects.”
A spokesperson for the DOE emphasized that a final decision has yet to be reached.
“It’s incorrect to imply those two projects have been terminated and we cannot confirm any lists provided by unidentified sources,” Ben Dietderich, the department’s press secretary, mentioned via email, adding: “The Department remains in the process of a detailed and individualized review of financial awards given by the previous administration.”
Last week, the DOE declared it would cancel about $7.5 billion in grants for over 200 projects, stating that they “did not adequately progress the nation’s energy requirements, were not economically feasible, and would not yield a positive return on taxpayer investment.”
Battelle and 1PointFive did not respond to inquiries from MIT Technology Review.
“Rumors in the market have emerged, and Climeworks is ready for all possibilities,” said Christoph Gebald, one of the company’s co-CEOs, in a statement. He further added: “The requirement for DAC is rising as the world falls behind its climate objectives, and we are striving to reach the gigaton capacity that will be essential.”
“We are unaware of a resolution from the DOE and continue to engage constructively with the administration during the project review,” Heirloom stated.
The escalating threats of climate change have spurred the progression of the direct-air capture sector in recent times.
Climate projections indicate that the world may need to extract billions of tons of carbon dioxide each year by around the middle of the century, in addition to substantial emission reductions, to prevent the planet from warming beyond 2˚ C.
Carbon-capturing direct-air facilities are considered among the most dependable methods for removing this greenhouse gas from the atmosphere, yet they are also among the costliest and most energy-demanding techniques.
Under former President Joe Biden, the US commenced offering increasingly substantial grants, subsidies, and various forms of support to cultivate the emerging sector.
The grants currently under scrutiny were designated under the DOE’s Regional Direct Air Capture Hubs program, which was financed through the Bipartisan Infrastructure Law. The aim was to establish several major carbon removal clusters nationwide, each capable of capturing and sequestering at least a million tons of greenhouse gas annually.
“Today’s announcement that a decision to revoke lawfully designated funding for the [direct-air-capture initiatives] could arrive soon jeopardizes granting an advantage to international rivals and undermines the commitments made to businesses, communities, and leaders in Louisiana and South Texas,” stated Giana Amador of the Carbon Removal Alliance and Ben Rubin of the Carbon Business Council in a joint statement.
This story was revised to incorporate additional quotes, a response from the Department of Energy, and further context regarding the carbon removal sector’s development.
