DOE plans $500 million in grants to build new CO2 transport infrastructure

As part of the Biden administration's push to promote carbon capture technologies to reduce greenhouse gas emissions, the US Department of Energy announced Aug. 25 a plan to provide about $500 million in grants to help companies build carbon dioxide transportation infrastructure.

The DOE issued a notice of intent to fund the construction of CO2 pipelines and other transport facilities using money available from 2021's bipartisan infrastructure law. The department said it expects to issue a funding opportunity announcement in the fourth quarter of 2023.

"Meeting the Biden-Harris administration's goal of a net-zero emissions economy by mid-century will require accelerating the responsible development and deployment of technology to capture CO2 emissions from industrial operations and power generation and to remove CO2 directly from the atmosphere," DOE said in a statement. "These efforts must be supported by a safe and reliable system that can transport the captured CO2 away, either for permanent geologic storage or for conversion to useful, durable products."

According to the NOI, the $500 million will be in the form of Future Growth Grants, under which DOE will pay a CO2 transport developer a share of the cost difference required to increase the capacity of a project beyond the level for which firm offtake contracts have been agreed.

The FGG money is a portion of the $2.1 billion that the infrastructure law earmarked to fund DOE's carbon dioxide transportation infrastructure finance and innovation program for fiscal years 2022-26.

CO2 transport capacity

DOE said in the notice of intent that the goal of the Future Growth Grants is to encourage developers to build CO2 transport capacity that may not initially be needed but that will become useful in the future, as new direct air capture projects and other CO2 storage facilities go into service.

"Significant economies of scale can be achieved if additional up-front investments are made to 'oversize' CO2 transport infrastructure capacity to accommodate potential CO2 supplies that are not yet under contract," DOE said.

"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," the NOI added. "Investments in additional capacity provided by FGG could help avoid future construction of additional transport infrastructure (e.g., separate redundant transport networks) and associated environmental impacts."

To qualify for the grants, DOE said that a CO2 transport network must be "physically connected by way of pipeline, rail, road, and/or body of water." While existing pipelines or other infrastructure currently used to transport CO2 are not eligible for the grant, the NOI said that the repurposing of existing infrastructure to enable new CO2 transport would qualify.

Biden CCUS effort

If the funding opportunity announcement is issued, DOE said that all funded projects would have to be completed within five years of DOE's authorization of costs, with applicants having to show that their projects "can reasonably be expected to be used" for 20 years.

The funding plan comes as part of a broad effort by the Biden administration to promote emerging carbon capture, utilization and storage technologies to help decarbonize the power sector and heavy industry. DOE has said that meeting the president's goal of achieving a net-zero economy by 2050 will require the removal of between 400 million and 1.8 billion metric tons per year of CO2 from the atmosphere.

Currently, the nation's existing carbon transport infrastructure has a capacity of almost 60 million mt/year, DOE said. However, with new projects coming online, that figure is expected to jump to 250 million mt/year by 2035 and 450 million mt/year by 2040.

In its most significant CCUS step to date, DOE on Aug. 11 announced it would invest up to $1.2 billion to support two major direct air capture projects on the Gulf Coast. The two projects are the first of four national DAC hubs that DOE plans to fund via a $3.5 billion program launched in December.

The direct air capture hubs selected for funding were Louisiana's Project Cypress, proposed by Battelle, Climeworks and Heirloom Carbon Technologies, and the South Texas DAC Hub, to be developed by Occidental Petroleum subsidiary 1PointFive alongside Carbon Engineering and Worley.