By 2040, the U.S. could be capturing and sequestering 450 million metric tons (MMT) of carbon dioxide per year, and the Department of Energy wants to prepare for that future growth by investing $500 million in CO₂ pipelines.

DOE issued a Notice of Intent (NOI) on Friday for the funds, part of the $2.1 billion the Infrastructure Investment and Jobs Act (IIJA) authorized for a CO₂ transportation infrastructure finance and innovation program. The official funding opportunity for the $500 million in Future Growth Grants (FGGs) is expected to open between Oct. 1 and the end of the year.

As outlined in the NOI, the program’s goal is to help build “a domestic interconnected carbon management ecosystem” that can move CO₂ from point of capture to storage or use facilities.

But instead of building the system to accommodate current or near-term demand, DOE wants to encourage developers to oversize their pipelines now to “help avoid future construction of separate, redundant transport networks, as well as associated environmental impacts,” according to a press release.

DOE has estimated that carbon capture and sequestration of industrial CO₂ emissions alone could reach 65 MMT by 2030, 250 MMT by 2035 and 450 MMT by 2040.

The FGGs would be used to make up the difference in cost between building pipelines and other infrastructure for current demand versus projected future demand, according to the NOI.

“Significant economies of scale can be achieved if upfront investments are made to ‘oversize’ CO₂ transport infrastructure capacity to accommodate potential CO₂ supplies that are not yet under contract,” the NOI says. “However, financing for CO₂ transport infrastructure investments is often difficult or impossible to obtain unless firm contractual commitments are in place for both CO₂ supply and offtake.”

Building oversized transport infrastructure could also push carbon-emitting plants to install capture equipment, DOE said.

To be eligible for an FGG, a developer or other entity must be planning or building “large-capacity, common carrier infrastructure” for CO₂ transport. A common carrier would be defined as any pipeline or other infrastructure providing transport of CO₂, with the service open to the general public for set fees. Projects receiving an FGG would have to be completed within five years of the award and would have to demonstrate that the extra capacity would be used over the 20 years following completion.

Applicants would be required first to submit a letter of interest, to be evaluated by DOE. Developers deemed eligible for a grant would then be invited to submit full applications.

The NOI does not detail maximum or minimum amounts for the FGGs but says DOE expects to make additional funding announcements for the money.

The balance of carbon transportation funding, $1.6 billion, will be used for loans to be administered through the Loan Programs Office (LPO). Program guidance for the loans was issued in October 2022, but the LPO has yet to make any loans with the funds, according to DOE.

De-risking Carbon Capture

CCS remains a controversial technology in the U.S. Some environmental and clean energy groups continue to voice skepticism or outright opposition, seeing it as a hedge for continued use of fossil fuels. And, in fact, the technology has strong support from fossil fuel companies, such as Occidental Petroleum, which uses CCS for enhanced oil recovery ― injecting CO₂ into low-producing wells to push out more oil.

Advocates for the technology point to analyses from the International Energy Agency and U.N. Intergovernmental Panel on Climate Change, both of which frame carbon capture as necessary to limit the increase in the global average temperature to 1.5 degrees Celsius.

Friday’s announcement is one of a series of administration and DOE moves signaling ongoing support for a range of carbon capture technologies, beginning with the renaming of the agency’s Office of Fossil Energy as the Office of Fossil Energy and Carbon Management in July 2021.

Carbon removal technologies also are a rare point of common ground between the White House and Republicans and some conservative Democrats in Congress. The IIJA provides more than $12 billion for a range of carbon capture initiatives, including the CO₂ transportation program.

As part of the compromise hammered out between the White House and Sen. Joe Manchin (D-W.Va.), the Inflation Reduction Act authorized major increases to the existing 45Q tax credits for CCS, bumping up, for example, the credit for direct air capture (DAC) to $180/ton for permanently stored CO₂.

Both laws seek to draw private investment to the development of emerging clean technologies and their supply chains and build out the physical and entrepreneurial infrastructure needed to de-risk and grow demand for such projects. The FGGs could be used to de-risk CCS projects receiving other IIJA funding, such as the regional DAC hubs in Louisiana and Texas that DOE announced this month. (See DOE to Fund Direct Air Capture Hubs in Texas, Louisiana.)

As with other projects receiving major funding from the IIJA and IRA, FGG applicants will have to create community benefit plans laying out how they will involve communities in project development, ensure local jobs are created and provide other community benefits.

Another DOE announcement Monday named 13 finalists in the DAC Energy Prize for Innovation Clusters (EPIC). Each will receive $100,000 to develop incubators and other programs that will support the development of new DAC technologies and startups. One example, the gener8tor DAC Accelerator in Chicago, will use the money to develop a program to help five startups per year “with individualized coaching, mentorship, networking and supporter access.”

“To meet our net-zero ambitions, we must rapidly commercialize and scale carbon dioxide removal. That is why accelerating the direct air capture industry is so important,” said Brad Crabtree, DOE assistant secretary of Fossil Energy and Carbon Management. “The DAC EPIC Prize [finalists] have demonstrated a passion and expertise for assisting the transition of direct air capture technologies from an idea to a marketable product through design, industry networking and business strategy support.”

DOE also launched a Responsible Carbon Management Initiative in August to establish a set of industry principles for CCS project developers “to pursue the highest levels of safety, environmental stewardship, accountability, community engagement and societal benefits in carbon-management projects.” (See DOE Launches Responsible Carbon Management Initiative.)

Since the passage of the IIJA, more than 100 carbon-removal projects have been announced in the U.S., according to Crabtree.

“That’s why this Responsible Carbon Management Initiative is so important,” he said. “It will provide a framework for encouraging and recognizing best practices in the development of carbon-management projects and for fostering transparency and learning through greater data and information sharing among industry, governments, communities and other stakeholders.”