A breakdown of FY22 funding for carbon removal

Image: Elijah Mears

by Vanessa Suarez, senior policy advisor

Federal funding for carbon removal has skyrocketed over the past few months, crossing a historic threshold — more than $1 billion within a single fiscal year — thanks to the Infrastructure Investments and Jobs Act (IIJA) and FY22 omnibus. These timely investments preceded the IPCC’s third installment of its Sixth Assessment Report, which stresses that a broad portfolio of large-scale carbon removal solutions is essential to limiting global warming to 1.5°C and 2°C scenarios and avoiding catastrophic climate impacts. The IPCC emphasizes that policy and investments in research, development, demonstration, and deployment (RDD&D) are critical to bring carbon removal to gigaton scale and achieve our increasingly urgent global climate goals.

As a result of broad bipartisan and bicameral support for carbon removal, public funding support has gone from essentially zero to more than $1 billion in just a few years — aligning with recommendations from experts across the field. The IIJA and FY22 omnibus signal a turning point for carbon removal, with greater emphasis on demonstrations and deployment of direct air capture (DAC), forest carbon removal, and carbon storage, as well as growing support for more novel applications like carbon mineralization, BECCS, and ocean carbon removal. Beyond the more than $1 billion dedicated to carbon removal, there’s also additional funding for R&D of carbon utilization approaches and for critical infrastructure like geologic carbon storage and carbon dioxide transportation that will be essential to scaling carbon removal.

Funding breakdown

Here’s how the IIJA and FY22 omnibus bill allotted funding for carbon removal across the federal government for FY22.

IIJA Funding

The first dollars and cents for carbon removal in FY22 came from last year’s IIJA, which included both authorizations and appropriations for DAC, carbon storage and transportation, and forest carbon removal. The IIJA provided notable support for DAC, including $3.5 billion for the landmark Regional DAC Hubs program (over 5 years, with $700 million appropriated in FY22), $115 million for the DAC technology prize competitions authorized in the 2020 Energy Act, and $3 million to kickstart the Carbon Dioxide Transportation Infrastructure Finance and Innovation Program. For land-based solutions, the IIJA allotted $400 million over five years, starting in FY22, for mine forestation and Tribal reforestation efforts.

For more information on IIJA funding, please visit our blog.

FY22 Omnibus

Last month, Congress passed the FY22 omnibus, investing hundreds of millions for carbon removal across departments and solutions.

Energy & Water

The Energy & Water (E&W) bill funds RD&D efforts across the Department of Energy (DOE), with a total investment of about $179 million for carbon removal in FY22. The CDR Program, established through the 2020 Energy Act, is funded at $49 million, to be used in coordination with an additional $20 million at the Office of Energy Efficiency and Renewable Energy (EERE) and $35 million at the Office of Science (SC) for concerted RD&D of CDR technologies and approaches. Within funds for carbon removal, there is $25 million at DOE’s National Energy Technology Laboratory (NETL) for establishment of a DAC facility; such investments ensure we have a full innovation pipeline, with support from early stage to demonstration.

For the first time, the E&W bill contains specific carve-outs for more nascent carbon removal approaches. Within the $129 million, $500,000 is set aside for operational planning for large-scale BECCS, and $5 million is dedicated for RD&D on ocean carbon removal. There is also an additional $50 million marked for the pursuit of effective, safe, low-cost, and scalable carbon mineralization efforts. Investments that responsibly scale these undertested technologies are critical, as reaching gigaton-scale of removal will require a diverse portfolio of approaches and mature, ready-to-deploy solutions capable of enhancing climate resilience in frontline communities.

Beyond direct funding for carbon removal (and not included in the $179 million), both the Carbon Utilization and Carbon Storage programs saw plus-ups from Congress, including support for the CarbonSAFE and Regional Carbon Sequestration Partnership (RCSP) initiatives and testing of algae-based utilization systems. While we don’t include carbon storage, utilization, or transportation when calculating total funding levels, support for relevant programs is critical to enable DAC and other negative emissions technologies.

Agriculture and Interior

This year, we saw a shift in the Department of Agriculture’s (USDA) report language for “climate-smart agriculture,” a USDA-endorsed term that refers to a set of guiding objectives for agriculture — sustainably increasing productivity, enhancing climate resilience and adaptation, and mitigating greenhouse gas emissions. In FY22, the omnibus provides $4 million for climate-smart agriculture to the NRCS Conservation Operations account, though it is difficult to disambiguate funding for soil carbon specifically. Core research programs, like the Agricultural Research Service, Agriculture Food and Research Initiative, and Sustainable Agriculture Research and Education also received increases, including funds for research on soil carbon priority topics like rangeland research and research on cover crops. While public funding for agricultural research has stagnated in recent decades, we’ll need increased investments over the coming years to rapidly scale soil carbon and design effective carbon-based incentives rooted in science.

Many essential programs for scaling forest carbon removal also received increased funding in FY22, including Forest Inventory & Analysis, Forest Health Management, Vegetation and Watershed Management, and Urban Community Forestry, among others. These programs conduct breaking-edge R&D to improve forest health and productivity, collect and manage data on forest conditions and trends, support national seedling supplies, improve urban and community forest land, and much more. Across the US Forest Service, the Interior bill provides around $5 million to study the quantity and spatial distribution of forest biomass and carbon, research emerging wood products, and quantify carbon as an ecosystem service for ecological and economic benefit. In addition to advancing forest carbon removal, the Interior bill contains close to $4 million for R&D of biological carbon sequestration, geologic carbon sequestration, carbon mineralization, and coastal blue carbon. $5 million is also provided for development of expertise and capacity at the EPA’s Underground Injection Control program for Class VI wells permitting — a timely increase for implementation of IIJA funds and that arrives in light of burgeoning interest for carbon removal from individual states.

Defense and Commerce

The Defense and Commerce bills also contain modest provisions in support of scaling carbon removal solutions. In line with authorizations from the SEA Fuel Act of 2019, $10 million is provided to the Department of Defense for R&D of DAC and ocean carbon removal. Under the Department of Commerce, dedicated funding for R&D of DAC and carbon removal generally also increased from FY21 levels. These investments signal carbon removal’s rising significance to the work of various federal departments, as well as growing interest in the benefits carbon removal solutions can provide.

Conclusion

Reaching $1 billion for carbon removal RD&D within a single fiscal year is huge, but it’s just the beginning. Responsibly building a large-scale carbon removal field will require thoughtful and intentional funding. Following the trajectory of other climate technologies that were buoyed by decades of dedicated investments from the federal government, such as solar renewable energy, the full portfolio of carbon removal approaches will also need high, sustained levels of support from Congress and the administration to reach their potential.

As federal investments for carbon removal RDD&D rise, we must also target funds to ensure components of equity and justice are integrated into the advancement of carbon removal solutions. The broad portfolio of carbon removal solutions will inarguably impact the social, economic, and environmental fabric of local and global communities; we must leverage funding to identify and bring to fruition potential benefits for communities to the forefront while ensuring possible harms are avoided. Support for robust public engagement efforts, cumulative impact assessments, improved cultural competency, transparency and accountability frameworks, social science research, and other environmental justice priorities germane to carbon removal will require intentional investment and intentional roll-out of funds. Thoughtfully and responsibly scaling US investments in carbon removal RDD&D can address both our historical carbon debt and our global responsibility and capacity to lead in mitigating climate change.

Carbon removal is a long-term pursuit, and investments today pave the way for large-scale deployment decades from now. When it comes to the future of carbon removal funding, we have our own ideas of what FY23 in particular should look like. These Congressional investments work hand-in-hand with the President’s Budget Request’s growing support for land- and technology-based carbon removal. We look forward to continuing to work with both Congress and the administration on responsible and transformative carbon removal solutions.

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