Earlier today, the Department of Energy (DOE) announced the recipients sharing in $1.2 billion in Direct Air Capture (DAC) Hub funding made available via the Infrastructure Investment and Jobs Act (IIJA).
Four California projects, including three in Kern County, were successful in their grant applications:
- California DAC Hub Consortium. The DAC Hub Consortium received $12 million in order to develop an engineering study and advance community benefits planning for a potential DAC Hub in Kern County.
- Community Alliance for Direct Air Capture. CALDAC received $3 million to perform a feasibility study for a potential DAC Hub in Madera, Fresno or Kern counties. A key focus of this study will be on community engagement and governance structures.
- Aera Direct Air Capture Hub – Kern. Aera Federal, LLC received $2.8 million to explore the feasibility of a potential DAC Hub in Kern County.
- Western Regional Direct Air Capture Hub. Chevron New Energies received $3 million to explore the feasibility of a potential DAC Hub in Kern County.
Other awardees had projects located in Texas, Alabama, North Dakota, Louisiana, and more. With $2.3 billion in funding still remaining at DOE, including two full-scale grants of about $500 million, California will need to demonstrate considerable policy progress to ensure it is viewed as a competitive and favorable destination for large-scale DAC and carbon capture and storage (CCS) investments.
Background on Regional DAC Hubs
IIJA provided $3.5 billion to support the development of four Regional DAC Hubs across the nation. While this funding is currently being spread across multiple projects to support planning and engineering studies, it will ultimately make four major outlays of about $500 million to support project construction.
In this first of two funding rounds, a total of $1.2 billion was awarded. The list of awardees can be found here and here. Two projects, including one in Texas and one in Louisiana, were awarded $500 million full-scale Hub grants. This means that two more Hub grants will be awarded in the second funding round. This second funding round is expected to initiate in late 2024 or 2025.
For more information on the Regional DAC Hubs program, you can view the DOE web page.
Biggest challenge lies ahead
The fact that multiple California projects received their awards is an important milestone. The Governor and California Air Resources Board recently identified the importance of carbon removal to meeting the state’s climate goals. Federal support would help build out the infrastructure for large-scale carbon removal. However, California faces strong competition from other states for the next round of DOE funding.
The state could take on a more substantive role in the effort to secure a DAC Hub in California. Go-Biz provided critical leadership on the development of the highly competitive (and hopefully successful) ARCHES Hydrogen Hub proposal to the DOE. This kind of leadership is key to coordinate stakeholders around an ambitious project and vision that is unlikely to materialize without direct state involvement.
In addition, the state could provide a regulatory foundation that is more supportive of carbon infrastructure. For example, current law prevents California from establishing the safety standards necessary to permit CO2 pipelines, limiting the potential to develop an ambitious and competitive DAC Hub with multiple sources of CO2 being captured, transported and geologically stored.
Finally, Hub grants of $500 million require a 50% match of project costs. Some level of state funding commitment would make California more competitive and allow the state to ensure that the development of a DAC Hub is consistent with California’s environmental and community protection goals. One current bill, SB 867 (Allen), includes bond funding for this purpose.
For more information, please contact Sam Uden (sam@csgcalifornia.com) or Amanda DeMarco (amanda@csgcalifornia.com).