US announces first winners in $3.5B carbon removal program

Two direct air capture facilities along the U.S. Gulf Coast will receive federal funding to try to pull millions of metric tons of CO2 from the sky.
By Maria Gallucci

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A large industrial facility with a large cylindrical tank in the background under a gloomy gray sky
Global Thermostat's direct air carbon capture facility in Brighton, Colorado (RJ Sangosti/MediaNews Group/The Denver Post/Getty Images)

The U.S. Gulf Coast has long been America’s epicenter of oil refining and fossil gas processing. 

Now, two new facilities in the energy-dense region will aim to undo some of the damage caused by burning all those fossil fuels — by removing carbon dioxide directly from the sky.

On Friday, the Biden administration announced the first two winners of a $3.5 billion competition that aims to accelerate direct air capture,” or DAC, projects across the United States. The two remaining hubs will be announced in 2024 or shortly thereafter, according to the U.S. Department of Energy. 

It’s a really big moment for this technology, for the sector and for carbon removal as a whole,” Sasha Stashwick, director of policy at Carbon180, told Canary Media. She said the program has the potential to boost the total global capacity of DAC projects by roughly 400 times.

It’s a huge opportunity to shape the way that the sector develops in the U.S. and, therefore, globally,” she said.

DAC plants generally use giant industrial fans to draw in large amounts of air, then separate out the CO2 using chemical solutions or filter materials. The captured CO2 can be injected into deep geological formations, or it can be repurposed to make valuable industrial products, such as concrete and synthetic fuels.

The technology is considered to be a front-runner in the broader push to permanently remove carbon dioxide from the atmosphere. Climate scientists say that — in addition to radically and immediately slashing greenhouse gas emissions — such a step will be necessary in order to avert the worst consequences of global warming. 

1PointFive, a subsidiary of Occidental Petroleum, is one of this week’s winners. The company is developing what it says could be up to 30 DAC plants on 106,000 acres of private land just south of Corpus Christi, Texas. Once operational, each facility is expected to be capable of removing up to 1 million metric tons of CO2 per year — roughly equal to the annual emissions from 2.5 gas-fired power plants. 1PointFive’s partners include the Canada-based DAC developer Carbon Engineering and the global engineering firm Worley.

The second hub, known as Project Cypress, will be built in southwest Louisiana. Climeworks and Heirloom, two leading DAC technology developers, are partnering with the applied-sciences organization Battelle to design and operate a CO2-sucking machine, which is also intended to capture over 1 million metric tons of carbon dioxide per year. The company Gulf Coast Sequestration will then take the captured CO2 and permanently store it in a Class VI deep saline aquifer.

The competition was created in 2021 by the Infrastructure Investment and Job Act. Along with about $1.1 billion in funding split between the two hubs, this first phase includes about $100 million in grants for 19 concept and engineering studies spanning from Alaska to Florida that could pave the way for future projects, Noah Deich, deputy assistant secretary for the DOE’s Office of Carbon Management, told reporters on a press call.

We know that we need more than four DAC hubs in order to meet our climate goals, so it’s really part of building that industry and showing this technology has potential across geographies,” Deich said.

Climeworks, which operates the world's largest direct air capture plant in Iceland, is participating in the U.S. DAC hub program. (Climeworks)

Although DAC is considered to be one of the more developed forms of carbon dioxide removal — with 18 test, pilot and commercial projects deployed around the world — the technology is still in its relative infancy. Current versions of DAC systems are extremely energy-intensive and highly expensive to operate.

1PointFive said its DAC hub in South Texas will be solar-powered.” Battelle confirmed that Project Cypress will initially purchase clean energy from the local utility as it builds its first demonstrator project, though it intends to build on-site renewable energy projects to power future DAC facilities.

The hubs will seek to secure a number of offtakers for the captured carbon, including potentially voluntary carbon markets, which dominate the field today, as well as the U.S. government. This week, the Department of Energy also confirmed its plans for a new $35 million carbon-purchasing program — the first such government-led initiative in the world. The DOE intends to support any project that removes carbon from the atmosphere, not just DAC facilities, as a way to boost demand for fledgling technologies.

We’re really excited to show how we can spur innovation through this new mechanism,” Deich said.

Neither the South Texas project nor the Louisiana project will use the captured CO2 for enhanced oil recovery,” a process that involves pumping gas into older oil wells to force up any remaining fossil fuel. That had been an outcome that environmental advocates feared might happen as developers sought a way to pay for their expensive new systems. 1PointFive is separately developing a DAC plant in the Texas Permian Basin that’s now under construction; it will use captured CO2 to boost oil well production.

Katie Lebling, an associate in the World Resources Institute’s climate program, said the federal DAC hubs will be crucial not just for advancing the technology but also for creating processes that engage and involve community members at every step of a project’s development. Building a DAC hub in a place where people don’t want it, or in a way that exacerbates environmental injustices, could undermine future efforts to accelerate carbon removal, according to Lebling.

There’s a lot riding on this,” she said. 

Maria Gallucci is a senior reporter at Canary Media. She covers emerging clean energy technologies and efforts to electrify transportation and decarbonize heavy industry.