DOE Funding Crucial to Scaling Carbon Management Industry

The bipartisan Infrastructure Investment and Jobs Act (IIJA) and the federal Section 45Q tax credit are the ‘twin pillars’ of domestic carbon management deployment—both are necessary policy levers to ensure meaningful deployment of the technology over the next decade. Thanks to bipartisan congressional leadership, which has laid a strong foundation for commercial deployment, carbon management technologies have emerged as a powerful economic driver in the US. Today, more than 270 projects across the nation have been announced, representing the full carbon capture, removal, transport, reuse, and storage project value chain, signaling that good policy will translate into real-world projects (see Figure 1).

This combination of economic and job benefits and emissions reductions fosters broad, deeply bipartisan support for carbon management technologies that is unprecedented in US energy policy.

Thanks to sustained federal support from the IIJA and the investment certainty created by the Section 45Q tax credit, we have a once-in-a-generation opportunity to scale the carbon management sector nationwide and deliver on the administration’s Energy Dominance Agenda. Already, these policies have driven billions of dollars in private and federal investment in states and regions across the country (See Figure 2).

DOE must continue implementing mission-critical carbon management programs authorized and funded by Congress. Otherwise, the US risks ceding its technology leadership position in carbon management to countries like China and the European Union that are rapidly deploying carbon capture technologies and supportive policy frameworks.

DOE’s carbon management funding is crucial to ensuring nationwide deployment of these technologies

The Coalition and its members have played a central role in building the available framework for nationwide project deployment by ensuring that key carbon management priorities were reflected in bipartisan legislation, including in the 2021 Infrastructure Investment and Jobs Act and the 2022 Inflation Reduction Act (IRA).

The IIJA builds on the authorizations created by the bipartisan Energy Act of 2020 and provides more than $12 billion in federal investments for commercial demonstrations and deployment of first-of-a-kind carbon management technologies and applications across sectors. This funding includes cost-shares, grants, and loans for project developers to conduct feasibility studies, build large-scale pilot projects, develop commercial-scale projects across carbon capture, direct air capture, reuse technologies, and essential supportive transport and geologic storage infrastructure.

The map below depicts the national footprint of initial projects awarded under the IIJA programs and the magnitude of the private investment already made across different regions of the country (see Figure 3). DOE has only just begun implementing the complete carbon management funding portfolio. Therefore, we can expect private investments to soar once IIJA is fully implemented. If properly and fully implemented, these federal dollars will drive the deployment of carbon management technologies—safeguarding and creating highly skilled jobs that sustain local economies and the American families that depend upon them.

These federal investments help developers lay the groundwork for projects that will eventually qualify for the Section 45Q tax credit for the secure geologic storage of captured CO₂ or projects that reuse captured carbon. DOE must deliver on these laws, ensure that selected projects move forward, and allow future funding opportunities to take root to ensure these domestic industries can reach economies of scale.

Federal demonstration & deployment funding complements and strengthens the 45Q tax credit

The federal investments outlined above have provided a strong foundation for bolstering the widespread deployment of carbon management technologies across sectors central to the US economy. This includes the industrial and energy sectors that make up the backbone of US manufacturing, as well as innovative technologies that directly remove carbon dioxide from the atmosphere or reuse captured carbon in products.

By itself, the private sector cannot take the risk of fully financing first-of-a-kind, capital-intensive energy projects, and carbon management is no different. At the same time, the build-out of carbon management projects and supportive infrastructure nationwide is essential to a broader, comprehensive strategy to provide affordable, sustainable energy production and environmental innovation, preserving American jobs, and demonstrating US technology leadership on the world stage.

As with the development of other energy technologies, federal investments in tax policy and research, development, demonstration, and deployment have been pivotal to the successful commercial liftoff of these technologies across the economy. With that in mind, the IIJA’s importance to maintaining investment levels and acting as a platform to further enhance the 45Q tax credit’s value proposition cannot be overstated.

The co-location of announced capture projects near IIJA-funded carbon storage projects demonstrates the overwhelming interconnectedness of IIJA-funded projects with Class VI well permits and the clear indication that projects receiving federal support are moving toward completion. Without the complementary efforts of the IIJA funding, many 45Q projects will be unable to access necessary storage infrastructure (see Figure 4).

Carbon management is America’s strategic advantage – for now

The US remains the global leader in the deployment of carbon management technologies, with 19 commercial-scale facilities operating with the capacity to capture over 22 million metric tons of CO₂ annually. However, governments in nations and regions worldwide, including China and the European Union, are developing competing frameworks and quickly gaining momentum on project deployment. Since 2022, China has met significant commercialization milestones. These include Asia’s largest capture facility at a coal-fired power facility, launching the region’s first offshore storage project, and region’s the first CO₂ pipeline. Further, China is in the final stages of building the world’s largest oxyfuel capture project in the cement sector. If the administration pulls back on implementing these DOE programs now, we risk ceding our leadership in deploying innovative carbon management technologies to China and other countries—full stop.

America stands at a crossroads in its effort to remain competitive and secure long-term leadership in the global energy economy, and carbon management technologies are central to that goal. The path forward is clear: continued implementation of federal funds for carbon management will preserve US energy leadership, bolster industrial competitiveness, and ensure that America defines—rather than follows—the future of this industry.