DOE Announces up to $1.8 Billion in Funding in Next Phase of Regional Direct Air Capture Program

On October 10, the U.S. Department of Energy's Office of Clean Energy Demonstrations (OCED) hosted a webinar providing an overview of the recently issued Notice of Intent (NOI) to award up to $1.8 billion in funding for new mid- and large-scale commercial direct air capture (DAC) facilities. The NOI represents the start of the next phase of OCED's Regional DAC Hubs program contemplated by the 2021 Bipartisan Infrastructure Law (BIL), which requires DOE to financially support the development of at least four regional DAC hubs. DOEestimates that a net-zero emissions economy will require annually removing and capturing at least 400 million metric tons of carbon dioxide (CO2) from the atmosphere and emissions sources. A critical step in reaching this benchmark will be accelerating the commercialization and scaling of promising DAC solutions which is the goal of this next phase of the Regional DAC Hubs program. The NOI promises publication of the funding opportunity announcement before the end of this year.

Regional DAC Hubs Program

As noted in the NOI, the BIL allocates $3.5 billion in funding to support projects that contribute to the development of Regional DAC Hubs. Each hub must demonstrate a DAC technology or suite of technologies at a commercial scale, with the capacity to capture at least 1 million metric tons of CO2 annually. Once captured, the BIL also requires that the CO2 be permanently stored or utilized in new products.

In December 2022, OCED issued the first funding opportunity announcement under the Regional DAC Hubs program, offering up to $1.2 billion to fund the design, construction or operation of regional DAC hubs. In August 2023, OCED announced the selection of two Regional DAC Hubs, to be located in Louisiana and Texas, respectively, as recipients of the total funding. That same month, DOE's Office of Fossil Energy and Carbon Management also announced 19 projects selected to receive funding for earlier stages of DAC project development, including feasibility and design studies, to assess viability of future DAC hub demonstrations.

OCED forecasted potential funding opportunities for mid-scale commercial DAC facilities earlier this year when it announced its request for information (RFI) regarding the challenges and risks of developing such facilities. During the October 10 webinar, OCED staff highlighted that access to carbon-free energy and CO2 transportation or storage infrastructure were common hurdles for potential facility developers.

Funding Topic Areas

The NOI details three funding topic areas for the newest round of funding: (1) Infrastructure Scaling Platforms, (2) Mid-Scale Commercial DAC Facilities and (3) Large-Scale Commercial DAC Facilities. Similar to the projects chosen in 2023, the NOI expects that the majority of the funding (e.g., $1.0-1.4 billion) will be allocated to larger-scale commercial facilities. However, to help accelerate the buildout of smaller facilities at Regional DAC Hubs, or that comprise new regional hubs, the NOI estimates that between $100-300 million will be awarded to infrastructure scaling platforms and mid-scale commercial facilities, respectively. Each topic area is summarized below.

• Topic Area 1- Infrastructure Scaling Platforms (ISPs): OECD intends to provide funding to up to three ISPs, or host sites, to help provide DAC developers with sufficient infrastructure to build and operate their facilities. ISPs will be expected to provide access to clean energy and CO2 offtake, such as storage, product utilization or transportation access. The maximum funding available for a single project is $250 million.
• Topic Area 2 - Mid-Scale Commercial DAC Facilities (MSCs): OECD seeks to fund up to eight MSC projects, each with a capture capacity between 2,000 and 25,000 tons of CO2 per year. MSC projects are expected to demonstrate the first commercial application of a DAC technology at this order-of-magnitude scale (e.g., integration with storage or utilization, and revenue generation). Projects may propose a variety of CO2 offtake applications, including permanent geologic storage or utilization in short- or long-lived products. Applicants will also need to convey a compelling vision for deploying the technology, following a successful mid-scale demonstration, at a scale of at least 100,000 tons of CO2 captured per year. The maximum funding available for a single project is $50 million.
• Topic Area 3 - Large-Scale Commercial DAC Facilities (LSCs): OECD intends to provide funding for up to six LSC projects with a respective minimum capture capacity of 25,000 tons of CO2 per year. LSC projects are expected to demonstrate the scale-up of a DAC technology already deployed commercially at a smaller scale. The maximum funding available for a single project is $600 million.

Projects in all topic areas will require a 50% minimum non-federal cost share.

Next Steps

The NOI states that the notice of funding opportunity will be released in the fourth quarter of 2024. The NOI also notes that OCED expects to require concept papers for mid- and large-scale commercial DAC facilities, and to require pre-applications for infrastructure scaling platforms. During the October 10 webinar, OCED staff predicted that such concept papers and pre-applications will be due in spring of 2025.

OCED is planning to host an in-person Carbon Management Industry Day on November 13. The intent is to allow staff to further discuss the objectives of the office's programs and funding opportunities, as well as to facilitate networking and team-building among industry members. Space for the event is limited and requires registration at the Industry Day page above.

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