Call to Action on a Direct Air Capture Hub in California

California has identified the deployment of carbon dioxide removal, including direct air capture and biomass carbon removal, as necessary to achieving the state’s climate goals. As newer technologies the federal Department of Energy is awarding four grants of roughly $500-700 million each to establish Regional Direct Air Capture Hubs (“DAC Hubs”) to support early development. Two of these grants have already been awarded to Louisiana and Texas. There is significant competition for the remaining two, including from Wyoming, North Dakota, Illinois, Arizona and Alabama.

To out-compete these other states California will need to take much more deliberate action in support of a DAC Hub. The leadership shown by the state in its successful $1.2 billion Hydrogen Hubs application, where it coordinated and aligned diverse stakeholders behind one comprehensive approach, is one potential model. New and supportive CDR policies currently being contemplated in the Legislature and in forthcoming regulations could also increase the DOE’s confidence in investing in California. Kern County is a region with the attributes and local expertise that could anchor a potential DAC Hub application.

Without additional action California risks missing out on this key opportunity to establish a foundation and attract major private investment in support of its carbon removal goals. Although a date has not yet been identified, we estimate that the state has roughly 12-months before the DOE opens its second and final funding round for DAC Hubs. Given the potential opportunity at stake, there is little time to waste.


The California Air Resources Board has identified needing 75 million tons of carbon dioxide removal (CDR) – or about 15% of the state’s total emissions – to achieve net-zero emissions by 2045 or sooner. This includes permanent CDR from technological approaches including direct air capture and biomass carbon removal, as the state’s natural and working lands (forests, soils) are expected to be a net source of emissions over the period to and including 2045 due to primarily wildfire.

This is a significant amount for a newer set of technologies, and investment today is needed to create the potential to achieve this target. For this reason, the Biden Administration in the Infrastructure Investment and Jobs Act provided $3.2 billion in grant funding for four Regional Direct Air Capture (DAC) Hubs to anchor early state-level development. Two of these major grants have already been awarded, while the federal DOE provided planning money ranging from $3 to $12 million to 19 other projects (see Figure 1, which shows 17 of these projects, excluding the two main awardees in Louisiana and Texas). The competition is now on to be one of the two final grantees to receive between $500-700 million.

Figure 1: 17 of the 19 projects awarded DAC Hub planning grants from the DOE. For short descriptions of each project, see here. For a higher resolution picture, see slide 6 of this DOE presentation here.

Wyoming, North Dakota set a strong pace

California was successful in the first funding round, with four projects awarded planning funds, including one project (sponsored by the Electric Power Research Institute) awarded $12 million. However, projects in Wyoming, North Dakota, Arizona and Alabama were also awarded this larger grant amount.

Wyoming and North Dakota in particular have demonstrated a keen interest to drive large-scale carbon management, having adopted the authority from the US EPA to permit their own carbon dioxide geologic storage wells (called ‘primacy’). These states also have lower energy costs and clear and streamlined permitting regimes to support carbon infrastructure and DAC Hub development.

Louisiana and Texas had adopted primacy and were in the pre-application process, respectively, at the time of their DAC Hub award last year. Arizona is currently in the pre-application process. No other states outside of WY, ND and LA have adopted primacy at this stage.

ARCHES may offer a blueprint for success

ARCHES (Alliance for Renewable Clean Hydrogen Energy Systems) refers to California’s Hydrogen Hub application, which was successful in receiving $1.2 billion in federal funding. As the other clean energy Hub program designated in the IIJA and funded by the DOE, the approach to its development and submission could provide useful insights for a potential DAC Hub application.

A key aspect to the success of ARCHES was state leadership. Initially, there were multiple separate applications in development, which in isolation were unlikely to establish the ambition and credible roadmap to delivery that was sought after by the DOE for a flagship investment. In response, the Governor’s Office of Business Economic Development (GO-Biz) intervened and coordinated stakeholders around a single joint California submission that was also backed by state government. The result was an application with higher ambition, comprehensiveness and credibility with a diversity of project developers (electrolytic and biomass clean hydrogen producers; transport and storage providers), large and priority end-users/off-takers such as ports, and supporting stakeholders (Figures 2a, 2b).

Figure 2a: This diagram highlights the scale and comprehensiveness of the ARCHES proposal, with production sites, offtakes and connecting infrastructure spanning multiple counties outlined in the proposal.
Figure 2b: This diagram highlights the multi-pronged nature of the proposal, with a variety of feedstocks, production and technology pathways, infrastructure connections and end-users.

Whether the state should pursue a single California DAC Hub application is an open question, although at the least a greater role for the state, such as tasking an agency with supporting a DAC Hub(s), would be useful. If a single application is pursued, existing project efforts should be central to this.

New CDR policies could also be significant

Another key lever is a supportive policy landscape that provides high confidence that a DAC Hub investment will catalyze even greater levels of drawdown. California is of course a climate leader, but there are obstacles and opportunities to creating a more favorable environment for CDR.

One key obstacle is the lack of a clear CDR permitting framework as well as potential streamlining for eligible projects. For example, current statute prevents the operation of CO2 pipelines in California, providing little incentive to develop this core infrastructure necessary for large-scale CDR. Capture and storage projects are approved at the local level where there is a wide variation in experience and (potentially) the standards to which projects are held. The forthcoming SB 905 proceeding at CARB should provide guidance to help address this second issue. But the pros, cons and parameters of a potential state-level authority, whether to provide technical support to local governments or as a centralized process similar to how the CEC permits renewables, should be considered. Additional streamlining for eligible projects, such as renewable-powered DAC, should also be considered.

Another key obstacle relates to the ability of the state to make clear determinations regarding unitization, landowner compensation and financial responsibility for storage projects where there are two or more tracts of land that overly the same geologic storage resource. Current statute enables the state (Department of Conservation) to develop guidance on this issue, but does not empower an agency with the authority to review, approve or deny proposed governing agreements. This is important as otherwise storage projects will be limited to large players that own major landholdings and reduce competition that could drive down CO2 storage costs.

Finally there are opportunities for new policies that could incentivize expansions in CDR. SB 308 (Becker) is one bill that could establish supportive CDR regulations and a new program to enable the state’s CDR goals. SB 867 (Allen), which is a proposed climate bond, or potential revisions to the Greenhouse Gas Reduction Fund could provide funding to support this program or as a state match for potential DAC Hub.

Kern County an attractive anchor for a proposal

Kern County is the heart of California’s energy economy, responsible for providing 70% of in-state oil and 80% of in-state natural gas resources. The result is a workforce that is steeped in the knowledge of how to source, extract and move liquids and gases through pipes and other infrastructure.

As the state phases down its reliance on fossil fuels, there is a good opportunity to support communities and the local workforce in Kern transition to carbon management. There is interest to do so, with three of California’s four early-stage DAC Hub grants sited in Kern, and the fourth potentially in Kern. Kern County is independently supporting a Carbon Management Business Park, and the Community College District has established a Carbon Management Institute to support workforce transitions.

A Kern DAC Hub proposal could also drive additional benefits, including to air quality, job and/or revenue opportunities for farmers forced to fallow lands due to groundwater pumping restrictions, and a path to decarbonize industrial sources, such as cement facilities, of which there are a number in Kern.


California’s potential to be one of the nation’s four Regional DAC Hubs depends on out-competing other states. At this stage, we estimate that additional policy and investment actions will be needed to give us the best chance of success. This could drive significant private capital into CDR technologies identified as necessary to achieve the state’s climate goals. At the very least, permitting reform and similar clarifications are needed. In addition, state leadership to help inform and drive a DAC Hub proposal that draws upon the successful ARCHES effort where relevant is also important. Kern County appears to be a promising region to focus state support, given the existing DAC project efforts already underway.

For more information, please contact Sam Uden ( and Amanda DeMarco (

Leave a Reply

Your email address will not be published. Required fields are marked *