Dec 20, 2022
A breakdown of the DAC hubs funding opportunity announcement
The need-to-know on DOE’s recent guidance
by Courtni Holness, policy advisor
Earlier this month, the Department of Energy (DOE) issued a funding opportunity announcement (FOA) for the historic Regional DAC Hubs program. An investment of this size — $3.5 billion total, $1.2 billion from this FOA — means these hubs will play an outsized role in defining the DAC industry, including how communities across the US understand the technology and its potential benefits.
This is an enormous opportunity to build the right foundation for carbon removal, catalyzing innovation and ensuring we remove legacy emissions in ways that center equity and justice. DOE’s announcement is a jumping off point for this vision, filling in details about eligibility, timeline, application requirements, and more.
Eligibility
In an evolution from the original notice of intent, the FOA is focused on DAC technologies alone. Other carbon removal approaches, such as biochar or biomass burial, may be included alongside DAC within a hub but will not be federally funded under this FOA.
Enhanced oil recovery (EOR) and preference for greatest net-climate benefits
EOR is eligible under this FOA, despite advocacy from climate think tanks across the board, including Carbon180. In our view, a DAC hub that utilizes removed carbon for EOR would not be in the spirit and intent of this technology, which should address legacy emissions rather than prolonging a reliance on fossil fuels.
Despite EOR’s eligibility, DOE will give preference to projects that have the greatest long-term net CO₂ emissions reduction, in line with the country’s larger net zero by 2050 goal — making the utilization, conversion, or storage of removed CO₂ within a given proposal a consequential factor in the selection process. The Biden administration has also called out the need for carbon removal to focus on legacy emissions in their budget request and staffed the Office of Fossil Energy and Carbon Management with environmental justice experts, both of which are promising.
Ownership models
The FOA allows for innovative structures of hub ownership, including different combinations of state and local governments, academic institutions, NGOs, and private corporations. This way, DOE can empower all stakeholders to participate in the decision-making process and share in the potential benefits of hubs, particularly disadvantaged communities that have historically been excluded.
Timelines and applications
In line with our recommendations, DOE will release program funding in phases to accommodate the full range of DAC technologies and their relative maturity, from development stage to deployment ready. Program phasing helps support and advance both near-term and longer-term DAC technologies. This FOA makes $1.2 billion available to begin the process of conceptualizing, designing, planning, constructing, and operating DAC hubs, with a focus on more mature DAC.
Applicants can seek funding through three different tiers: projects assessing their feasibility, projects that are ready to design hubs, and projects that are nearing construction — all of which have different requirements for stakeholder engagement. It’s important to note that DOE is primarily expecting proposals at the feasibility stage.
For interested developers, DOE spelled out some clear deadlines. Applicants must submit their letter of intent by January 24, 2023 and their full applications by March 13, 2023. DOE will then notify selected recipients around June 30, 2023, and award negotiations will kick off around November 30, 2023. And for developers that aren’t ready to apply this cycle, the next FOA is expected to come out in 2024 or later.
DOE also introduced the carbon matchmaker resource to connect applicants across the carbon removal supply chain with each other. This tool can help facilitate coordination between DOE and the network of developers for DAC, geologic storage, and renewable energy, uniting efforts across components of DAC hubs and the energy transition. These collaborations aid the effective use of federal resources, taxpayer dollars, and natural resources.
Environmental justice
As the first large-scale US deployments of DAC, these hubs are an opportunity to define the field with high-quality projects that create robust environmental and public health benefits, new jobs and economic opportunities, and broad community support. These benefits are not guaranteed, however, and DOE’s requirement to include Community Benefits Plans (CBPs) in proposals is vital to ensuring selected projects serve (not harm) local communities.
Starting from the pre-feasibility phase, CBPs will be required for all applications and account for 20% of a proposal’s technical merit review. Applicants must detail how they intend to deliver measurable community and job benefits, advance diversity, equity, inclusion, and accessibility, and contribute to the Justice40 initiative. But CBPs aren’t a one-time checkpoint — rather, they’re living documents that DOE will require to be updated with stakeholder feedback. As a new requirement of FOA proposals, ensuring CBPs are reviewed by qualified experts will be integral to accurate scoring.
Projects will be required to frequently analyze net climate benefits and track and report outcomes related to community benefits and non-CO₂ pollution to air, water, and soil. CBPs will need to prioritize engaging communities surrounding a potential hub site so that they have a determining influence over where and how projects are developed. Ultimately, DOE has been thoughtful about using CBPs as a tool to protect communities from increases in cumulative pollution, require meaningful benefits, and create high-paying jobs across the country.
Conclusion
DOE’s objective for the DAC Hubs program is to responsibly catalyze a commercial DAC industry and establish the US as a global leader in the development and demonstration of DAC. To reach this goal, DOE must build confidence in the private sector, the infrastructure required to scale up these technologies, case studies that DAC can help achieve climate goals, and CBPs that provide the greatest Justice40 benefits.
Edited by Tracy Yu
