Two commercial-scale direct-air carbon removal demonstration hubs on the Gulf Coast—set to be the largest in the world—could split about $1.1 billion in federal funding for development, the U.S. Energy Dept. said as it seeks to scale up a new domestic industry to scour carbon emissions from the atmosphere.
Set to negotiate DOE funding awards are Occidental Petroleum Corp., which is set to build the planned South Texas DAC project near Corpus Christi, Texas, using a technology to intake carbon dioxide and chemically treat it for geologic site storage or for reuse into other products; and non-profit R&D firm Battelle, which would develop Project Cypress in Calcasieu Parish, La., to rely on Gulf Coast sequestration for offtake and permanent CO2 storage in a deep saline aquifer.
It was not clear from the agency's Aug. 11 briefing where the projects are in obtaining permits from the US Environmental Protection Agency and other agencies for the plants and underground storage facilities.
The DAC process is different from carbon-capture technology. which prevents emissions from a power plant or factory from entering the atmosphere.
Occidental and Batelle claim their facilities would be the world’s first designed to remove up to 1 million metric tons of CO2 per year—which DOE said is more than 250 times the capacity of the largest operating DAC facility. It added that reaching a net-zero emissions economy will require annual removals by 2050 of 400 million to 1.8 billion metric tons of CO2 from the atmosphere and from emissions sources.
The projects set for investment are among 11 proposals submitted to DOE to obtain DAC funding from $3.5 billion earmarked in the 2021 Infrastructure Investment and Jobs Act to support construction of four U.S. hubs to develop the technology.
Two must be in economically distressed communities in fossil fuel producing regions—as the first selected projects are, both located in industrial areas of Louisiana and Texas that are gaining liquefied natural gas export-related development. The projects, estimating combined employment of about 5,000, seek to hire displaced fossil fuel sector workers. DOE and project team executives will hold in-person community briefings in the plant areas next month.
Both projects would be powered by clean energy sources, DOE and company officials said, with the Occidental plant using solar power from an undisclosed source and Battelle buying clean power from a local utility, and eventually building its own source. The latter did not specify the type of clean power it will use.
"If we deploy this at scale, this technology can help us make serious headway toward our net zero emissions goals," while government funding is still focused on more clean energy deployment, Energy Secretary Jennifer Granholm told the briefing.
The federal funding for each project, matched by the private partner, will support concept, design, construction and operation.
Funding for the other two projects will be made next year or soon after, Kelly Cummins, deputy director of DOE’s Office of Clean Energy Demonstrations, said at the briefing.
The projects seek to “capture all the lessons learned from demonstration projects in the past, and incorporate them into oversight of this project,” she told the New York Times. “We’re only approving one phase at a time, with a rigorous ‘go, no-go’ procedure. If any phase doesn’t work, it will be ‘no-go.’”
Cummins and company executives said the DOE-funded projects will not use captured CO2 for enhanced fossil fuel recovery, but agency officials have said previously that they are "encouraging projects to have revenue streams that will help support the takeoff of this commercial technology."
Occidental has said it could fund its planned overall DAC program with revenue from new products such as cleaner aviation fuel or "net-zero oil" developed through its treatment process, or from removal credits for carbon stored underground that are sold to other generators.
The Inflation Reduction Act enables companies that capture and permanently contain atmospheric CO2 to seek a $180 tax credit per metric ton. Credits, available when plant operation starts, can be obtained for a 12-year period under the law. It also offers incentives to companies that capture and sequester CO2 at industrial plants. The production cost now is about $500 per ton or more, companies say.
Occidental Aims to 'Advance Commercialization'
Occidental CEO Vicki Hollub said the South Texas DAC Hub “will advance commercialization of direct air capture and storage … that verifiably removes carbon dioxide from the earth’s atmosphere.” Company subsidiary 1PointFive will work to commercialize technology of team member Carbon Engineering Inc.
The energy giant said Aug. 15 it agreed to pay $1.1 billion to acquire Squamish, B.C.-based Carbon Engineering, which has worked with the 1PointFive unit since 2019, to deploy the DAC technology "in the most capital efficient and valuable way," said Hollub.
Australia-based Worley is providing engineering, procurement, and construction services. Detailed engineering and early site construction began last year, with completion set for 2024. Hollub said the firm and Carbon Engineering "share our vision in creating a carbon removal industry that can accelerate the path to net zero.”
The plant is set to initially capture up to 500,000 metric tons of CO2 per year and scale up to 1 million metric tons. Occidental has leased 106,000 acres in Kleberg County to support up to 30 DAC and sequestration plants, each also 1-million tpy, said Hollub. 1PointFive has said it seeks to deploy 70 DAC facilities globally by 2035, assuming current market conditions.
Occidental previously said it began construction last year on its first DAC facility in Ector County, Texas, with a 500,000-tpy capacity, which will be used for enhanced oil recovery.
The energy giant also announced earlier this month an agreement with Abu Dhabi National Oil Co. to develop one or more 1-million-tpy DAC plants in the UAE, which would be first of that size outside the U.S. The country said last month if would accelerate by five years to 2045 a net-zero carbon emissions goal and targets 2030 to be net-zero in methane emissions.
The state-owned oil company also finished drilling last month a CO2 injection well it claims is the world’s first to be fully sequestered, also announcing what it says is a $15-billion company decarbonization plan. The well will store CO2 captured from ammonia producer Fertiglobe’s UAE operations “safely and permanently underground,” the oil firm said, aiming to eventually capture 5 million tpy by 2030 even as it expands fossil-fuel energy production.
The efforts come as Dubai is set to host the two-week COP28 global climate change conference starting Nov. 30, with oil company CEO Sultan Ahmed Al Jaber named president-designate of the event.
Battelle Team Has DAC History
Battelle's Project Cypress will store captured CO2 at geologic storage areas owned by Gulf Coast Sequestration, CEO Lou Von Thaer said at the DOE briefing. Project partner Climeworks now operates the world's current largest operating DAC plant and storage site, an Iceland facility that now captures 4,000 tons of CO2 per year. Climeworks also is involved with two U.S. regional DAC hub proposals.
Another project partner, Heirloom, which said it builds low-cost DAC technology that removes CO2 at a large scale by rapidly accelerating the ability of minerals to absorb it from the air, runs North America’s only operating removal facility, located in Brisbane, Calif., which was the first to embed CO2 permanently in concrete earlier this year.
“This is an important step ... and shows the promise of DAC technologies combined with smart, permanent methods of sequestration,” said Heirloom CEO Shashank Samala..
According to Battelle, the new project is set to reach the 1-million-tpy removal target by 2029, depending on permits received and "long lead-time item schedules."
DOE Regional Hub Funding Shared
DOE also said Aug. 11 that it chose 19 projects to negotiate award of funds totaling up to $100 million to support feasibility studies and design for regional DAC hubs, with sector firms Chevron New Energies, GE Research and Siemens Energy Inc., and academic institutions such as Northwestern University, Arizona State University and the University of Kentucky among recipients.
Black & Veatch is a partner in the Arizona State project, which seeks $11.6 million, while Fluor Corp. and INTERA are supporting one in Wyoming that could win a $12.5-million award, and AECOM is aligned with a 40-member group based in California.
DOE also said Aug. 10 it seeks bids for a $60-million award for smaller DAC facilities that can remove between 1,000 and 5,000 tons of carbon per year—with the agency also announcing a planned $35-million carbon purchasing program—the world's first such initiative that is government led.
But some market observers are skeptical of what the big federal push will achieve. “Direct air capture is no miracle cure. It requires large amounts of energy, spurring more demand for the same fossil fuels that caused the climate crisis," said John Fleming, senior scientist at the Center for Biological Diversity’s Climate Law Institute, in a statement. "Even if those problems can be solved, it’s years away from being deployed at scale.”
Noting the two DAC projects set to win the largest DOE investment as "trailblazers," Mitch Landrieu, a former New Orleans mayor who now is a White House senior advisor and its infrastructure law coordinator, said the U.S. is positioning itself as a leader in this technology.
"This is the first major federal investment from any country on carbon removal at this level," Erin Burns, director of carbon removal for non-profit advocate Carbon180, told Reuters, "The U.S. is making a very large bet on this technology."