DOE Funding Targets Carbon Capture Projects

March 15, 2023 by Claire Turvill

The U.S. Department of Energy is offering $2.5 billion for two carbon capture project opportunities after recent legislation offering more incentives for carbon capture and carbon neutrality.

The U.S. Department of Energy (DOE) has announced two funding opportunities that aim to further develop efficient, effective carbon capture, utilization, and sequestration (CCUS) technologies, which is important to achieving the Biden administration’s net-zero emissions climate goals.


Carbon capture projects seek to reduce carbon emissions. Image used courtesy of Pixabay


Large-scale Carbon Capture Pilots

The first funding opportunity is for Carbon Capture Large-Scale Pilot Projects. This opportunity makes available up to $820 million for up to 10 pilot projects, with a maximum of 70% federal cost share. The aim of this funding opportunity is to facilitate the advancement of transformative CCUS technologies that capture carbon emissions from both coal or natural gas electric generation facilities and industrial facilities not intended for electric generation.

The goal is to generate operational data that will verify and validate the commercial potential of these technologies and inform future large-scale demonstration or commercial deployment plans. 

Applicants are expected to have completed a small-pilot scale prototype and be prepared to validate scaling factors for the large-scale pilot project. The focus is on less technologically mature projects, with Technology Readiness Levels between 5 and 7. Concept papers are due at the beginning of April, with full applications due mid-June.


Carbon Capture Demonstration Projects

The second funding opportunity is for Carbon Capture Demonstration Projects. This funding opportunity offers $1.7 billion for six commercial integrated carbon capture and storage (CCS) demo projects, with up to 50% federal cost share. This program seeks proposals for carbon capture projects that are designed for integrative infrastructure that considers the transportation and geologic storage of carbon dioxide. 

Possible project locations include: (a) facilities with coal electric generation or coal combined heat and power (CHP) generation; (b) natural gas CHP or natural gas steam methane reformer hydrogen producing facilities for electric generation; and (c) industrial facilities not purposed for electric generation–chemical or mineral production, pulp and paper production, iron, or steel production.


Coal-fired power station. Image used courtesy of Pixabay


Proposals must demonstrate a carbon capture efficiency of at least 90% over baseline emissions and prepare a roadmap for even higher CO2 capture efficiency within power and industrial operations. Demonstrations are expected to be ready at-scale.

It is required that the captured CO2 is stored in a secure, domestic, subsurface formation with sufficient capacity to store the amount of CO2 generation from the demonstration facility.

Concept papers are due at the end of March, with full applications due at the end of May.


DOE Funding

Carbon capture technologies have the potential to significantly reduce greenhouse gas emissions from industrial facilities, power plants, and other sources. By capturing carbon emissions and storing them underground or reusing them, carbon capture technologies can help reduce the CO2 released into the atmosphere, which can slow the rate of climate change events.

The DOE is expected to issue a third carbon capture funding opportunity in the future for projects that are in the early stages of development, including Front-End Engineering Design studies. These funding opportunities come on the heels of the Section 45Q tax credit expansion and enhancement, which provides incentives for the deployment of carbon capture projects.

The Section 45Q tax credit was expanded by the Inflation Reduction Act, which extended the construction start date to January 1, 2033, and lowered the capture threshold for eligibility. In addition, the act increased tax credit rates for carbon capture projects based on the method of sequestration and the satisfaction of wage and apprenticeship standards.

Both funding opportunities were issued by the DOE’s Office of Clean Energy Demonstrations and Office of Fossil Energy and Carbon Management and National Energy Technology Laboratory. These awards will be funded under the Bipartisan Infrastructure Law.

The DOE’s funding opportunities provide significant support to researchers, developers, and companies working on innovative carbon capture technologies. The funding will help accelerate the development of these technologies, making them more affordable and accessible for many industries and applications.

As a result, carbon capture technologies will play an ever more important role in greenhouse gas emission reduction and transitioning to a low-carbon future.