DAC on track in 180 days
What billions in new federal funding can do for DAC in the US
by Noah Deich, president
The Infrastructure Investment and Jobs Act (IIJA) signed into law last month is a gamechanger for the carbon removal field, infusing billions in new funding into a range of carbon removal solutions. One of the biggest sources of support for carbon removal is the newly-created $3.5 billion Regional Direct Air Capture Hubs Program. Let’s dive into what these hubs are, why this new policy support is so important for direct air capture (DAC), and how the Department of Energy (DOE) and others can turn this funding into high-impact projects.
What are DAC hubs?
Over the next five years, DOE has $3.5 billion in new funding to establish four DAC hubs across the US that:
- have the capacity to store and/or utilize at least 1 million metric tons of CO2 captured by DAC technology each year, per hub, and
- are located in regions with heavy concentrations of fossil fuel industry, to help seed a transition from a fossil fuel workforce to a carbon removal one.
DOE has significant latitude for implementing these hubs. For example, DOE can provide funding for a range of CO2 transportation, utilization, and storage activities associated with DAC efforts — not just the removal equipment.
Where DOE has less control is timing: Congress has given DOE a 180-day window for releasing their initial funding opportunity announcement. This condensed timeline will require DOE to make a number of important program design decisions quite quickly, and should serve as a call to everyone in the DAC ecosystem to engage in this conversation quickly.
Why are DAC hubs important?
The hubs provision in the IIJA is a big deal for DAC. For context, Congress first started providing support for DAC in 2015 and scaled funding to tens of millions of dollars only last year. Jumping to $3.5 billion puts the field at the level of funding that the National Academies has determined is necessary for the technology to come down the cost curve in a meaningful way.
Furthermore, providing funding for multiple hubs is a smart way to begin creating regional economies around DAC projects. Geographic diversity of early DAC projects will enable different technology configurations and supply chains to emerge, avoiding the risk of locking in any one approach. The politics of hubs are also smart: by piloting DAC in multiple geographies, broad coalitions of stakeholders will be invested in the future of DAC projects.
But while the new funding for DAC projects is great news for the field, it will stretch the capacity of DAC developers to scale quickly. Today, there are few DAC developers capable of delivering a project at the million-ton scale in the near term. Carbon Engineering has announced plans for such a project in Texas, but the biggest operational DAC facilities are at the thousand-ton scale today, such as Climeworks’ Orca. The history of point-source carbon capture projects offers a note of caution here: large-scale, quickly designed projects have run into significant engineering issues and cost overruns. DAC developers must learn lessons from these past failures to ensure projects succeed and create a positive political tailwind for further growth of the field.
The potential for DAC projects to accelerate quickly also makes it essential for civil society to engage with government and industry stakeholders. Now is the time to ensure that the voices of communities and workers are heard in the development process so that projects only happen in the places where communities want them. Civil society and DOE leadership can help make sure that DAC projects share benefits and costs equitably between local communities and the often faraway technology developers and investors.
Between now and the initial funding opportunity announcement in mid-2022, DOE will have to answer a number of key questions. For example, DOE will have to determine how it wants to coordinate DAC prize funding with other carbon removal and decarbonization initiatives funded by Congress in the IIJA (see below). Then, it will have to determine how its grant funding can have the highest leverage in achieving the administration’s Carbon Negative Earthshot, Justice40, and Build Back Better goals. DOE is unlikely to be able to fund all of the potential hubs and types of infrastructure (e.g. DAC, transportation, utilization, storage) with current funding. As a result, it will have to work with stakeholders to understand how to best utilize the influx of venture capital and corporate purchase agreements for scaling DAC projects.
Department of Energy industrial decarbonization and carbon removal provisions in the IIJA
- SEC. 40308. Carbon Removal (Regional DAC Hubs Program): $3.5 billion
- SEC. 41005. Direct air capture technologies prize competitions: $115 million
- SEC. 40304. Carbon Dioxide Transportation Infrastructure Finance And Innovation: $4.6 billion
- SEC. 813. Regional Clean Hydrogen Hubs: $8 billion
- SEC. 41004. Carbon Capture Demonstration and Pilot Programs: $3.5 billion
Now is the time for industry and civil society to share their input with DOE about what successful DAC hubs should look like. Industry needs to help DOE understand their current roadmaps for DAC projects and what type of public support would help them accelerate these efforts the most. And environmental groups, labor unions, and environmental justice organizations have an opportunity to help DOE walk the walk on embedding high-road labor practices, community benefits and equity, and environmental protections into their funding announcements.
2022 stands to be a significant turning point for the field, catalyzed by the forward-looking and ambitious Regional DAC Hubs Program. Now it is up to the administration and the rest of the DAC ecosystem to ensure that this new funding turns into a tailwind to scale DAC over the coming decades, helping us secure all of the benefits it has to offer.