Power & Pipes

On December 13, 2022, the Department of Energy’s Office of Fossil Energy and Carbon Management released a Funding Opportunity Announcement (FOA) to make available up to $1.236 billion of funding to promote the development of four Regional Direct Air Capture (DAC) Hubs. This FOA is intended to accelerate the commercialization of, and demonstrate the processing, transport, geologic storage, and conversion of carbon dioxide (CO₂) captured from the atmosphere.

The Bipartisan Infrastructure Law appropriated a total of $3.5 billion to DOE to establish a program to provide funding for projects that contribute to the development of four regional DAC Hubs. DOE is expected to issue a second FOA to make available additional funding in 2024 or later.

A Regional DAC Hub is defined as a network of direct air capture projects, potential CO₂ utilization/conversion offtakers, connective CO₂ transport infrastructure, subsurface resources, and sequestration infrastructure located within a region. A Regional DAC Hub is expected to:

• facilitate the deployment of direct air capture projects;
• have the capacity to capture and sequester, utilize, or sequester and utilize at least 1,000,000 metric tons of CO₂from the atmosphere annually (1 MTA) from a single unit or multiple interconnected units;
• demonstrate the capture, processing, delivery, and sequestration or end use of captured carbon; and
• be able to be developed into a regional or interregional carbon network to facilitate sequestration or carbon utilization.

A Regional DAC Hub is expected to include the infrastructure (i.e., CO₂ pipelines or other required transport methods) needed to connect the proposed atmospheric carbon capture, processing, storage, and conversion sites. The captured CO₂ will be stored in a secure, domestic CO₂ storage facility and/or converted to valuable products that demonstrate a reduction in the lifecycle GHG emissions when compared to the equivalent incumbent product. The carbon storage facilities should have sufficient capacity to store carbon from the Regional DAC Hub for at least 12 years of operation. If necessary, agreements for the offtake of CO₂ emissions may be used.

The FOA identifies three topic areas for funding:

• Topic Area One: Feasibility (Phase 0) is designed to support earlier-stage efforts to explore the feasibility of a potential location, ownership structure, business model, CO₂ storage/utilization option(s), and technology partner(s). The FOA will provide up to $3 million per project in federal funds for up to 12 feasibility studies for Regional DAC Hub concepts. This funding will enable projects that are in the process of formulating their concept to conduct relevant analysis, networking, and stakeholder engagement necessary to advance the projects from a concept stage.
• Topic Area Two: Design (Phase 1) is designed for Regional DAC Hub projects that are ready to pursue a front-end engineering design (FEED) study for a Hub’s initial capture capacity and supporting infrastructure. The FOA will provide up to $12.5 million per project in federal funds for up to eight FEED studies for Regional DAC Hubs. To be eligible, the applicant must be ready to design a Regional DAC Hub that captures at least 50,000 tons of CO2 per year (50 KTA), provide evidence from prior operations to support that scale-up, and present a build out plan to reach the goal of at least 1 MTA.
• Topic Area Three: Build (Phases 2-4) is designed for Regional DAC Hub projects that have already completed a FEED study and are seeking support for project development. To be eligible, the applicant must be ready to perform a detailed design to build a Regional DAC Hub that captures at least 50 KTA CO₂, provide evidence from prior operations to support that scale-up, and present a build out plan to reach the goal of at least 1 MTA CO₂, among other requirements. The FOA will provide up to $50 million per project of federal funds for up to two Regional DAC Hubs to complete the design and permitting phase. Following a down-selection process, the FOA provides up to $500 million per project in federal funds for up to two awards to execute and complete the procurement, construction, and operation phases for the initial capacity and build-out plan, if applicable.

The FOA stated that DOE will give preference to Regional DAC Hubs that include a diversity of DAC technologies. Preference will also be given to proposals that support the Carbon Negative Shot goal of $100/net ton of CO₂e and to proposals that demonstrate the potential to reach at least 1 MTA net CO₂ removal capacity.

Applicants that seek to receive federal funding under this FOA must submit a letter of intent to DOE by January 24, 2023. Full applications are due on March 13, 2023. Only applicants who have submitted a letter of intent that meets the eligibility requirements of the FOA are eligible to submit a full application.

This funding announcement supports the goals of DOE’s Carbon Negative Shot initiative, which promotes innovation in CO₂ removal pathways that will capture CO₂ from the atmosphere and store it at gigaton scales for less than $100/net metric ton of CO₂-equivalent.