DOE announces over $3.5 billion in carbon management funding opportunities

[co-author: Cameron Tarry Hughes]

The U.S. Department of Energy (DOE) has announced three funding opportunities to develop carbon capture and transport technologies, totaling over $3.5 billion in investment. These opportunities offer significant support for the commercialization of carbon removal technologies and signal the outgoing administration’s commitment to ambitious greenhouse gas reduction goals.

Each of the funding opportunities is called for by the Bipartisan Infrastructure Law (BIL), which authorized nearly $90 billion for DOE to expend on the full range of decarbonization options, of which up to $2.537 billion is intended for domestic CCUS demonstration and commercial-scale projects. We previously wrote about two of these carbon capture funding opportunities when DOE previewed them in October. Under the first funding opportunity, DOE is offering up to $1.3 billion in funding for point source carbon capture and storage projects and regional carbon management networks. The second funding opportunity includes up to $1.8 billion in funding for the design, construction, and operation of direct air capture (DAC) facilities in furtherance of developing four regional DAC hubs. The third funding opportunity includes up to $500 million for expanded CO2 transport systems.

All three funding opportunities aim to support commercial-scale or near-commercial projects. The first two opportunities focus on high technology readiness levels (TRLs)—that is, projects at a large pilot or commercial scale—to support carbon removal technologies through the so-called “valley of death” between initial demonstration and commercialization. DOE hopes that by providing financial support through this crucial stage, it will help “de-risk CCUS technology and increase investor confidence.” Point Source FOA p. 16. The third opportunity focuses on expansion of in-development CO2 transport systems to meet future transportation needs.

The Intergovernmental Panel on Climate Change notes that carbon dioxide removal is a key component of most of the mitigation pathways that can limit warming to 1.5°C or 2°C. However, successful deployment of carbon removal technology requires an interconnected, “whole system” development approach while simultaneously competing with lower-cost carbon mitigation strategies. It is clear that carbon capture technologies will play an important role in supporting flexible, low- or zero-carbon power systems, and strategic government support can ease the path to commercial viability.

In particular, the significant level of funding provided for in these funding opportunities suggests that the Biden administration believes in the role of carbon removal technology, but the application timelines may indicate some political uncertainty. Concept papers for the point source carbon capture applications are not due until March 5, 2025. For the DAC funding opportunity, initial submittals are due sooner, by January 31, 2025, but full applications for both opportunities are not due until July 2025, with selection and negotiation of award agreements not scheduled until the end of the year. The carbon transport system funding opportunity will have four application phases through January 2026. These long timelines may be designed to minimize risk that the funding opportunities will be abandoned right out of the gate by the incoming administration. The deadlines afford the new team an opportunity to get comfortable with the important role these funding opportunities can play in ensuring a strong future for the nation’s fossil fuel resources, which President-elect Trump voiced strong support for in his campaign. Interested applicants must submit the initial application materials in a timely manner, even though final funding decisions are a long way off.

Specific details about these funding opportunities are below.

Point source carbon capture

The first funding opportunity (DE-FOA-0003473) will make available up to $1.3 billion for federal cost shares of 50-80% per project—the federal cost sharing maximum. DOE proposes to award funds to approximately 11 projects across three topic areas:

1. Commercial-scale demonstration of integrated carbon capture, transport, and storage at up to one coal-fired plant and up to two industrial plants, each with a minimum capture capacity of 300,000 metric tons/year of CO2. FOA p. 13.

• Proposed projects must demonstrate high CO2 capture efficiency over baseline emissions.
• Qualified applicants will have CCUS technologies of at least the equivalent of TRL 7, i.e., able to deliver an at-scale demonstration and show the potential for commercial replication.

2. Large-scale point source carbon capture pilot projects designed to capture either (a) a minimum of 75,000 metric tons/year of CO2 from an exhaust stream at an existing or new domestic industrial or commercial facility, or (b) CO2 from a minimum 20 Mwe slipstream at an existing coal or natural gas generation facility. FOA p. 14.

• For any proposed pilot scale lower than these above benchmarks, an applicant must justify its lower objectives.
• Qualified applicants must have commissioned a small pilot prototype and have validated or be in the process of validating a pilot at TRL 6.
• DOE notes that it will take into account the different levels of advancement for coal- and natural gas-integrated carbon capture technologies.

3. Networked CCS demonstrations, i.e., integrated, coordinated planning and commercial development of the key components (such as CO2 emitters, transport, and storage providers or operators) of a localized carbon management “network.” FOA p. 15.

• This funding opportunity will focus on areas where carbon storage site development has already begun.
• This award is available for networks that would capture point source emissions from coal-fired or natural gas power plants, or from industrial plants.
• Preferred applications will have the following additional characteristics:
  • Carbon capture technologies of at least TRL 7;
  • A storage or utilization scale of at least 50 million metric tons of CO2 within a 30-year period, and at least 100,000 metric tons/year for the first five years;
  • Two or more CO2 emitters in the network;
  • Proof of detailed site characteristics of the storage site in preparation for Class VI, Class II, or Outer Continental Shelf “Authorization to Construct” permit; and
  • Preliminary title research for the pipeline network.

Eligible applicants must be domestic entities, except under limited circumstances in which the applicant is granted a waiver. FOA pp. 7-8. For all three topic areas, concept papers are due by March 5, 2025, and full applications are due by July 1, 2024.

Direct air capture funding

The second funding opportunity (DE-FOA-0003442) is part of DOE’s Regional Direct Air Capture Hubs Recurring Program, which is a BIL-directed initiative designed to support the development of four regional DAC hubs, each with a 1 million metric ton/year CO2 capture capacity. As an opportunity in a recurring program, this particular set of awards will focus on technology with higher levels of commercial readiness. FOA p. 6. DOE proposes to make available up to $1.8 billion for anywhere between seven and seventeen DAC projects, also across three topic areas:

1. Infrastructure access platforms at a host site for small- and mid-scale DAC facilities. FOA pp. 11-12.

• The infrastructure access platform will give DAC developers a place to build and operate facilities with access to shared post-regeneration CO2 conditioning processes. It will also provide access to other critical elements for a DAC facility—namely, clean energy and CO2 offtake.
• DOE notes that some federal and privately funded DAC projects already advancing in the United States may be good candidates.
• Qualified applicants must demonstrate plans to create access to, or develop, energy and offtake resources or services, namely additional DAC-related balance-of-plant infrastructure, including an initial list of potential DAC “tenants.”

2. Mid-scale commercial DAC facilities as supplemental contributors to the DAC hubs. FOA pp. 12-13.

• Qualified applicants will be able to “convey a compelling vision” to deploy their technology at a capture level of at least 100,000 metric tons/year of CO2, following a successful mid-scale demonstration.
• Applicants for this topic area must, among other things, document that all core processes handling capture, regeneration, and energy integration, when integrated, are not less than TRL 6.

3. Large-scale commercial DAC facilities as the primary contributors to the DAC hubs. FOA p. 14.

• Each facility is expected to target a capture capacity of at least 25,000 metric tons/year of CO2.
• Qualified applicants must “convey a compelling vision” for subsequent deployments of at least 10x the proposed facility capacity.
• Applicants for this topic area must also, among other things, validate that key processes handling capture, regeneration, and energy integration, when integrated, are not less than TRL 7.

Applicants for topic area 1 must submit a pre-application, while applicants for topic areas 2 and 3 must submit a concept paper. The pre-application or concept paper is due by January 31, 2025, and the application for all three project areas is due by July 31, 2025.

Carbon dioxide transportation

Third and finally, DOE is re-opening a funding opportunity (DE-FOA-0002966) for CO2 transportation infrastructure under DOE’s Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) program. This funding opportunity makes available up to $500 million in “Future Growth Grants” to design, develop, and build large common-carrier CO2 transport systems with greater transport capacities than are currently needed. FOA pp. 2-3. There are two topic areas for this funding opportunity:

1. Expansion of a base project that is using a CIFIA loan from the DOE Loan Program Office (LPO). FOA p. 4.

• The proposed project must be an expansion of a “base project” funded by an LPO CIFIA loan consisting of large-capacity common carrier infrastructure that can transport an increased amount of CO2. FOA p. 5.

2. Expansion of a base project funded through other means, i.e., not through the CIFIA program. FOA p. 5.

• The proposed project must be an expansion of a “base project” consisting of large-capacity common carrier infrastructure that can transport an increased amount of CO2. FOA p. 5.
• Despite being funded outside the CIFIA program, the base project must still meet all CIFIA program eligibility requirements except for LPO Loan Repayment. FOA p. 6.
• Applicants must have secured funding for the base project and have firm commitments for CO2 supply and offtake for the base project capacity. FOA p. 6.

Applications for both topic areas can be submitted during four review periods open between February 2025 and January 2026. Letters of Interest for the first review period are due by February 17, 2025, and full applications are due by April 1, 2025.

[co-author: Cameron Tarry Hughes]

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