U.S. Energy Department to spend $3.7 billion on carbon removal

Source: By Liz Hampton in Denver, Reuters • Posted: Tuesday, December 13, 2022

Equipment used to process carbon dioxide, crude oil and water is seen at an Occidental Petroleum Corp enhanced oil recovery project in Hobbs
Equipment used to process carbon dioxide, crude oil and water is seen at an Occidental Petroleum Corp enhanced oil recovery project in Hobbs, New Mexico, U.S. on May 3, 2017. REUTERS/Ernest Scheyder

Dec 13 (Reuters) – The U.S. Department of Energy on Tuesday agreed to commit $3.7 billion to finance projects to remove planet-warming carbon from the atmosphere and meet the nation’s goal of net-zero greenhouse gas emissions by 2050.

Tuesday’s announcement formalizes a previously announced plan to finance four direct air capture hubs to draw carbon dioxide (CO2) from the air and store it underground.

The agency also outlined programs to bolster research on carbon removal technology and fund grants to state and local governments and utilities for carbon utilization. The initiatives are funded by the Bipartisan Infrastructure Law.

“We must tackle the legacy pollution already in our atmosphere to avoid the worst effects of climate change,” said U.S. Secretary of Energy Jennifer Granholm.

The Department of Energy estimates that initiatives taken through the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law will by 2030 push economy-wide greenhouse gas emissions 40% below 2005 levels.

The proposed direct air-capture hubs will yank at least 1 million tonnes of carbon from the atmosphere annually, for storage underground or conversion into products. Applications for the hubs are due early next year, and it will likely be at least two years before they are in operation, the Department of Energy said.

Dozens of U.S. carbon capture projects have been proposed to take advantage of Federal 45Q tax credits provided by the IRA. Direct air-capture projects receive a per-tonne credit of $180 versus $50 previously.

Removing carbon directly from the air is more expensive than from manufacturing or utility sources, such as ethanol plants. No large-scale direct air-capture projects are operational in the United States, though some projects are underway.

“We don’t see it as fundamentally more technologically complex,” said Noah Deich, the Energy Department’s deputy assistant secretary for carbon management. “What we hope is that this catalyzes a positively reinforcing cycle where the technology gets cheaper and cheaper as it deploys at larger and larger scales.”

Occidental Petroleum Corp (OXY.N) has proposed a $1.1 billion, large-scale direct air-capture project in West Texas. CarbonCapture, a California-based firm founded by tech entrepreneur Bill Gross, is aiming to launch a direct air-capture project in Wyoming next year.

Reporting by Liz Hampton in Denver; Editing by Jonathan Oatis and Bill Berkrot

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