U.S. Adds $3.1 Billion in Funding for Carbon-Capture Projects

If the world is going to reduce greenhouse gas (GHG) emissions to net-zero levels by 2050, a lot of things need to go right, with the success of the International Energy Agency’s (IEA) long-term plan balancing on three different pillars. First, there are emissions reductions from improvements to fossil fuels and processes, such as power generation and industrial production. Next, there are advancements in bioenergy, a category that includes biofuels like ethanol, sustainable aviation fuel (SAF), and renewable diesel (RD). And then there’s direct air capture (DAC) — a minor factor so far, but one with the potential for significant growth, especially given the billions in U.S. funding already set aside for it. In today’s RBN blog, we look at U.S. plans to develop four regional DAC hubs, how those proposals will be evaluated, and the likely timeline for their development.

Given all the recent attention, you’d think the prospects for carbon-capture project development are fantastic. In the U.S., last year’s Inflation Reduction Act (IRA) featured significant increases in the 45Q tax credit for carbon sequestration, improving the economics for a wide range of carbon-capture projects. On a global level, it seems clear that efforts to reduce greenhouse gas (GHG) emissions and reach a net-zero world will continue for a long time to come. Nearly every plan to reach that target includes a significant reliance on carbon capture, with the International Energy Agency (IEA) forecasting that 7,600 million metric tons per annum (MMtpa) of carbon dioxide (CO2) — that’s 7.6 gigatons per year — will need to be captured and sequestered by 2050. We are a long way from those levels, given that most estimates put global carbon-capture capacity at a little more than 40 MMtpa today, or less than 1% of what the EIA thinks we’ll need in less than 27 years. In today’s RBN blog, we look at the main factors holding back the wider commercialization of carbon-capture initiatives in the U.S.

At the most basic level, carbon-capture technology is not new, but it has attracted a lot more attention in recent years amid discussions about how best to transition to a net-zero world by 2050. Efforts to ramp up carbon capture have faced a number of hurdles, however, including the difficulty in capturing some emissions at the point where they’re generated. That’s where direct air capture (DAC) — which essentially works as a large-scale air filter and can be located just about anywhere — comes into play. In today’s RBN blog, we take a closer look at the still-emerging technology and its limitations, a project in Iceland that is the largest currently in operation, and plans by Occidental Petroleum to make Texas home to the world’s largest DAC facility.