DOE Considers Cuts to Carbon Capture Projects, Raising Uncertainty
WASHINGTON, March 28 (Reuters) – The U.S. Department of Energy (DOE) is evaluating potential cuts to hundreds of millions of dollars in grants allocated to two projects in Texas and Louisiana. These projects are designed to demonstrate the commercial-scale capture of carbon from the atmosphere, a key component of President Biden’s climate strategy.
These “Direct Air Capture” (DAC) hubs are part of the Biden administration’s initiative to significantly reduce U.S. greenhouse gas emissions by promoting and commercializing this nascent, yet costly, carbon removal technology. The DOE’s Office of Clean Energy Demonstrations launched these hubs. When operational, these hubs are projected to remove more than 2 million metric tons of carbon emissions annually, surpassing the capacity of the world’s largest existing DAC plant in Iceland.
The projects in question are the Louisiana’s Project Cypress, spearheaded by Battelle, Climeworks Corporation, and Heirloom Carbon Technologies; and the South Texas DAC Hub, a venture proposed by Occidental Petroleum (OXY.N) subsidiary 1PointFive, Carbon Engineering and Worley.
According to several sources familiar with the matter, these projects are on a list of Biden-era programs that may be eliminated to fund tax cuts under consideration in Congress’s budget reconciliation bill. These sources requested anonymity as they are not authorized to speak publicly. Energy Secretary Chris Wright is currently reviewing the bill.
The two hubs were initially awarded $550 million and $500 million, respectively, under the Biden administration. However, they have only received their initial grant tranches of $50 million each.
A DOE spokesperson indicated that the department is conducting a comprehensive review to ensure programs align with current priorities. “This review is ongoing, and speculation by anonymous sources about the results of the review are just that – speculation,” the spokesperson stated.
The roughly 20 smaller DAC research projects identified by the Biden administration for grants are not on the list of programs under review, according to sources. Their status remains unclear.
One source involved in one of the projects stated that these capital-intensive demonstration projects cannot proceed without receiving their remaining grants. They also emphasized that the projects may not survive even a short period of uncertainty while the DOE makes its final funding decisions.
To address this, Louisiana state officials are actively lobbying Energy Secretary Chris Wright and the state’s congressional delegation to secure funding for their DAC hub. In a letter to the state’s U.S. senators and representatives, Louisiana Secretary for Economic Development Susan Bonnett Bourgeois urged them to “contact DOE Secretary Chris Wright and ask him to take every necessary step to advance this critically needed federal grant.”
Occidental Petroleum did not provide a comment on the potential DAC hub cuts but noted during an investor call in February that the company has held discussions with President Donald Trump regarding the need for DAC technology and financial support.
A person points at a stack of trays holding treated limestone, used to absorb CO2 from the air, at Heirloom’s new plant in Tracy, California. Heirloom Carbon/Handout via REUTERS
