The Biden administration is actively promoting carbon capture and storage (CCS) technologies as part of its efforts to reduce carbon emissions. A significant aspect of this initiative is the Department of Energy’s plan to provide $500 million in grants to companies involved in building carbon transport infrastructure. The Department has issued a notice of intent to fund the construction of new carbon capture facilities, with the funding expected to be announced in the fourth quarter of this year.
Under the leadership of President Biden and Vice President Harris, the United States has set a goal of achieving net-zero emissions by 2050. The Department of Energy states that achieving this goal will require significant efforts to capture CO2 emissions from industrial operations and power generation, as well as directly removing CO2 from the atmosphere. A key element in supporting the rapid development of CCS is the establishment of a safe and efficient system of CO2 pipelines to transport captured gas to designated storage sites, which can include underground rock formations or facilities that convert CO2 into valuable products.
Startups have already begun utilizing captured carbon to create products such as fashion bags and fuels. Recognizing the importance of CCS, the Department of Energy will provide $500 million in subsidies through its Future Growth Grants program. Under this program, CCS developers will receive payments or a share of the cost difference required to enhance their project’s capacity. It is worth noting that this subsidy is just a fraction of the total $2.1 billion allocated to support the DOE’s carbon transportation infrastructure funding program, which will provide support over a four-year period from 2022 to 2026.
The primary objective of the DOE’s Future Growth Grants is to incentivize carbon transport developers to construct the necessary infrastructure. While this infrastructure may not be immediately required, it will become essential as direct air capture (DAC) and other storage facilities become operational. The Department emphasizes that these upfront investments in “oversizing” transport capacity are intended to accommodate potential future carbon supplies. By providing additional capacity through the grants, the development of redundant carbon transport networks in the future can be avoided. This approach aligns with the scaling up of carbon capture projects like DAC, allowing pipelines and networks to operate synchronously.
Carbon dioxide removal (CDR) is a critical component in achieving the 2050 net-zero emissions goal. The Department of Energy estimates that between 400 million and 1.8 billion metric tons of CO2 must be removed annually. Currently, the existing CO2 transport infrastructure in the country can only remove 60 million metric tons per year. However, as more projects are initiated, this capacity is projected to increase to 250 million metric tons per year by 2034 and 450 million metric tons by 2040.
While the current pipelines and other CO2 transport infrastructure are not eligible for the subsidy, repurposing them to create new capacity is a qualified option. A major requirement for funding eligibility is that the infrastructure must be physically connected through pipelines, rail, road, or bodies of water. Once the funding program is announced, qualified projects must be completed within five years, as authorized by the Department. Funding applicants must also demonstrate that their projects will be useful or viable for at least twenty years.
The DOE’s $500 million funding program is part of the government’s broader commitment to support and advance emerging CCS technologies. These engineered carbon removal technologies are considered crucial in decarbonizing the power sector and heavy industries. Earlier this month, the Department of Energy announced that it would provide $1.2 billion in grants to two large DAC projects on the Gulf Coast. One project is being led by Climeworks and Heirloom, while the other is being developed by Oxy, a subsidiary of Occidental Petroleum, and Carbon Engineering. This investment is the first of four DAC hubs that the Department will support through its $3.5 billion subsidy program. Additionally, the DOE has invested over $13 million in 23 projects to support research and development for CCS. Earlier this year, the Department allocated over $2.5 billion to fund two carbon capture initiatives.
The US government’s commitment to CCS is further reinforced by the DOE’s $500 million grant plan, aimed at developing carbon transport infrastructure. With substantial funding and a focus on carbon removal technologies, the country is making significant strides towards achieving its ambitious net-zero emissions goal.