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USA: DOE Announces $7 Billion for Carbon Capture, Transport, and Storage Infrastructure

Three funding opportunity announcements and a finance program provide significant investments to support carbon capture and sequestration.

Demand for carbon capture and sequestration (CCS) to meet global and national climate goals is on the rise. The International Energy Agency (IEA) 2020 World Energy Outlook suggests that CCS could contribute approximately 15% of cumulative emissions reductions worldwide by 2070.[1] The Intergovernmental Panel on Climate Change (IPCC) AR6 Working Group III Report further identifies the need for carbon dioxide (CO2) removal technology and to build a carbon management industry to achieve global net zero goals.[2] In view of the growing interest in CCS, and as discussed in this Latham blog post, the Biden Administration has announced ambitious decarbonization goals that prominently feature efforts to deploy CCS in the US.[3]

In September and October 2022, the US Department of Energy (DOE) released three funding opportunity announcements (FOAs) and one new finance program that, cumulatively, will provide an additional $7 billion for CCS infrastructure. Two of the FOAs feature grant funding for front-end engineering design (FEED) studies, and the final FOA and finance program feature a combination of grants and loans. Funding for these programs was appropriated in the Infrastructure Investment and Jobs Act (IIJA), which President Biden signed into law in November 2021. The IIJA delivers approximately $75.8 billion for energy and minerals-related research, demonstration, technology deployment, and incentives, including $12.2 billion administered by DOE and dedicated to CCS technology and infrastructure.

This blog post summarizes the three FOAs and the new finance program.

Carbon Capture Demonstration Projects Program
DOE’s Office of Clean Energy Demonstrations (OCED), in collaboration with the Office of Fossil Energy and Carbon Management (FECM) and the National Energy Technology Laboratory (NETL), is issuing this FOA for FEED studies for integrated CCS systems. DOE anticipates allocating nearly $190 million to fund up to 20 FEED studies for integrated CCS systems that will separate, transport (if required), and store carbon from: (1) coal electric generation facilities; (2) natural gas electric generation facilities; and (3) industrial facilities not purposed for electric generation.

All FEED study proposals must offer CCS system designs that can store or sequester carbon for at least 12 years of operation or explain how off-take agreements will be utilized to transport carbon away from the CCS facility. Under this program, “DOE expects to make up to 20 awards between $5.5–12.5M each with a minimum of a 50% cost-sharing from the awardees.”[4] A second FOA is expected later in 2022 to support detailed design, construction, and operation of six CCS demonstration projects that can be readily replicated and deployed at fossil energy plants and major industrial sources of CO2. This FOA would increase the total available funding under the Carbon Capture Demonstration Project Program to $2.54 billion.

Interested applicants must submit mandatory letters of intent to DOE by October 21, 2022, and submit full applications by December 5, 2022.

Carbon Dioxide Transport Engineering and Design
FECM will manage this FOA, which provides up to $100 million to finance FEED studies that support and accelerate the planning for CO2 transport by a variety of modes, such as rail, trucks, ships, and pipelines. An immediate need exists for CO2 transport to service multiple points of capture and one or more points of storage. Therefore, the first round of solicited applications will prioritize CO2 pipeline projects with two or more carbon capture sources connected to one or more secure geologic storage locations and/or to one or more CO2 conversion locations (e.g., a location that converts CO2 into carbon-based chemicals and/or materials). The CO2 must be derived only from anthropogenic sources, which could include direct capture of CO2 from ambient air, and must be delivered to CO2 conversion sites or secure geologic storage facilities. DOE has noted that it may prioritize projects sited in different regions that will provide DOE with increased understanding of the diversity of CO2 transport costs and potential network configurations.

Applications for this FOA are due on November 28, 2022.

Carbon Storage Validation and Testing
FECM and NETL are jointly issuing this FOA for Carbon Storage Assurance Facility Enterprise (CarbonSAFE) projects. The CarbonSAFE initiative began in 2016 and seeks to identify and provide detailed characterizations of large geologic carbon storage complexes throughout the US. The initiative includes four phases that span pre-feasibility projects to permitting and constructing a secure geologic storage complex. Previous funding covered the first three phases: pre-feasibility; storage complex feasibility; and site characterization and permitting projects. This FOA will focus funding on the last two phases: site characterization; and permitting and constructing the storage complex. Specifically, the DOE is providing up to $2.25 billion to support the development of new and expanded large-scale, commercial carbon storage projects with capacities to store 50 or more million metric tons of CO2, along with associated CO2 transport infrastructure.

Applications for this FOA are due on November 28, 2022.

Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) Program
DOE’s Loan Program Office, in partnership with FECM, will manage CIFIA, which provides up to $2.1 billion to support loans, loan guarantees, grants, and administrative expenses to finance large-capacity projects that build shared transport infrastructure to move CO2 from the points of capture to facilities that will either store the CO2 or convert it to value-added products. Public or private sector entities may apply, and must submit a letter of interest to the Secretary of Energy prior to submitting an application. Projects must constitute common carrier infrastructure for CO2 transportation and must have eligible project costs that are reasonably anticipated to be at least $100 million.

Together, these funding opportunities exemplify the Biden Administration’s efforts to substantially accelerate CCS technology deployment. The IIJA, FOAs made pursuant to the IIJA, and the recent Inflation Reduction Act could exponentially expand CCS infrastructure through a combination of FOAs, tax incentives (such as the 45Q tax credits), and other funding mechanisms.

https://www.jdsupra.com/legalnews/doe-announces-7-billion-for-carbon-6855449/