US DAC Grants Highlight Technology's Diversity

Direct air capture (DAC) technology got a major boost from the US government last week when the Department of Energy (DOE) announced the first batch of recipients of billions of dollars in grant funding to advance the nascent technology. Awards went to a variety of developers and technologies across the country, demonstrating the geographical flexibility of DAC as a viable method of reducing global emissions.

The funding represents "the world’s largest investment in engineered carbon removal in history," according to DOE, and stems from the $3.5 billion Regional DAC Hubs program created by the 2021 Bipartisan Infrastructure Law. The first tranche of awards ranged from development-ready projects to pilot tests, targeting companies and research programs of all sizes from the Pacific Northwest to the deep South.

Not all of the winning projects will become hubs, most likely, but the funding was cheered across the carbon-removal community. "This hubs program will help companies drive down the technology’s cost and capitalize on decades of experience storing and moving carbon," raved Jack Andreasen, policy manager for carbon management for Breakthrough Energy Ventures. "These hubs will ... position the US to be the global leader in both the development and deployment of carbon-removal technologies."

The DOE program aims to fund four hubs in total, each capable of removing at least 1 million tons per year of CO2 from the atmosphere, while supporting numerous smaller research projects. The 2021 law specifies that DOE give strong consideration to regions with existing CO2-intensive fuel production or industrial capacity, and requires at least two hubs to be located in “economically distressed communities" in regions with high levels of fossil-fuel resources. The agency plans to announce another tranche of awards in 2024.

Hub Scale

The two hub-scale awards from the DOE went to a pair of projects on the US Gulf Coast, a hotbed for industry and efforts to reduce emissions. The region has a long history of oil and gas production, which also makes it ideal for permanent geologic sequestration of CO2. The Gulf Coast is also starting to give rise to new cleaner fuel-production methods amid growing market interest for things like sustainable aviation fuel and low-carbon methanol — technologies for which DAC can provide useful supplies of CO2.

The Gulf Coast is also strategic thanks to a local workforce that possesses many of the skills needed to build and operate DAC facilities, says Shawn Bennett, energy and resilience division manager for Battelle, one of the grant winners. This enables a "new pipeline of workforce" for professionals to "come together and innovate in the region," he tells Energy Intelligence.

Battelle, a technology-focused nonprofit, is leading Project Cypress in Calcasieu Parish, Louisiana, alongside DAC technology specialists Climeworks and Heirloom. It expects to start work later this year after finalizing award negotiations with DOE worth $500 million or more. Bennett says the project's proximity to the heavily industrialized corridor near the Louisiana-Texas border "holds much promise for future partnerships in developing an interregional carbon network to facilitate sequestration and/or carbon utilization."

DAC pioneer Occidental Petroleum snagged the other major grant from DOE, also worth at least $500 million, to build a DAC hub at King Ranch in Kleberg County, Texas. The funding provides a further boost to a DAC program that is already well under way — Oxy's 500,000 ton/yr Stratos project in the Permian Basin in West Texas, which broke ground last year, will be the largest DAC facility in the world when it starts up in 2025.

Oxy has already announced plans to make King Ranch its next area of focus for DAC development. The company is planning as many as 30 more DAC plants on the 106,000-acre site that will host the DOE-funded facility. Oxy says the site has capacity to store up to 3 billion tons of CO2 and the potential to capture up to 30 million metric tons of CO2 per year.

Separately, Oxy this week announced the acquisition of its technology provider Carbon Engineering for $1.1 billion. Oxy CEO Vicki Hollub said she expects the acquisition will help accelerate cost reductions for DAC and drive technology innovation, while also creating a path to technology licensing and royalties.

Driving Innovation

Another 19 projects at an earlier stage in development — including two led by oil majors — also won the right to negotiate for funds from the DOE program. Chevron will study a potential hub in Kern County, California, that would build on existing low-carbon-technology pilots and other proposed projects planned in the San Joaquin Valley. In Louisiana, Shell is looking to develop technologies that can "enable accelerated and replicable carbon removal and permanent storage in ways that protect and generate workforce opportunities," DOE said.

Other compelling proposals include a potential hub in Utah combining next-generation geothermal energy and DAC, led by Houston-based upstart Fervo Energy. In another project-feasibility award, Battelle is working with technology giant Siemens Energy and nuclear power producer Constellation Energy, among others, on a project in the Midwest dubbed Teras Direct Air Capture — also known as "Monster DAC."

For all of these projects, the focus now and in the future will be on driving down costs for DAC technology. It can cost $600 per ton or more to capture CO2 through DAC. Costs at Oxy's Stratos plant are pegged at $400-$500/ton, still well above the $180/ton in tax credits provided by the US Inflation Reduction Act. Lower-cost DAC solutions continue to emerge, and the recent round of funding could help facilitate further cost reductions. John Thompson, technology and markets director for the Clean Air Task Force, said these first projects "will help us to discover the initial costs and create the roadmap for driving them down in the future.”