Two years of IIJA: An overview of carbon management implementation to date
According to the Department of Energy (DOE), the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and decarbonization roadmaps such as Princeton University’s Net Zero America report, carbon capture is a vital decarbonization technology that must be deployed at a large scale to slow climate change.
The United States is a global leader in deploying carbon management technologies. Supportive federal policy and regulation are now expected to drive significantly more polluting facilities to deploy carbon capture. The Infrastructure Investment and Jobs Act (IIJA) was a major milestone in the United States’ climate policy development during the Biden administration, laying the foundation for investments in carbon management ecosystems. In total, Congress approved $12.1 billion to drive emissions reductions with carbon management technologies. The programs funded in IIJA represent a part of the U.S.’s overall strategy to cut carbon pollution through innovation in carbon capture deployment, alongside other major supportive policies included in the Inflation Reduction Act of 2022.
Over the past two years of IIJA, new federal carbon management grant programs have been established, application and award processes have gotten underway, and funding has started moving out the door to states, Tribes, territories, and the private sector. There is significant momentum for carbon management project announcements in the United States. In this article, we offer a status update on some of the key policies in IIJA supporting carbon capture, utilization, and storage; their associated funding programs; and what’s next for implementation of the carbon management policy in the U.S.
Carbon capture and storage research, development, and demonstration
Carbon Capture Demonstration Projects Program
The $2.537 billion appropriated for the Carbon Capture Demonstration Projects Program is the largest and most consequential subset of funding for point source carbon capture in IIJA, offering a major opportunity to further develop and deploy technologies to capture carbon across novel applications. The program includes two buckets of funding: $189 million for carbon capture demonstration front-end engineering design (FEED) studies and $1.7 billion for carbon capture demonstration projects.
Progress and status: FEED study projects selected, and three demonstration projects selected for award negotiation. In May 2023, DOE selected nine FEED study projects for award negotiations, and two of those were since awarded.
| FEED Study Projects Awarded | Sector | State | Total Potential CO2 Reduction |
|---|---|---|---|
| Duke Energy | Power (IGCC) | Indiana | 3.6 million tons per year |
| Heidleberg Materials | Cement | Indiana | 2 million tons per year |
| FEED Study Projects in Negotiation | Sector | Location |
|---|---|---|
| Entergy Services | Power (NGCC) | Louisiana |
| Navajo Transitional Energy Company | Navajo Nation | Navajo Nation |
| Membrane Technology and Research | Power (coal) | Wyoming |
| Southern States Energy Board | Cement | Arkansas |
| Taft Carbon Capture | Power (gas cogeneration) | Louisiana |
| Tampa Electric Company | Power (NGCC) | Florida |
| University of Illinois at Urbana-Champaign | Power (coal) | Illinois |
In December 2023, DOE announced up to $890 million in funding for three demonstration projects selected for award negotiations. These three projects have the potential to curb ~7.75 million metric tons of CO2 emissions from three power plants annually. OCED will co-host virtual community-level briefings in January 2024 about these selections.
| Project Name | Location | Federal Cost Share |
|---|---|---|
| Baytown Carbon Capture and Storage Project | Baytown, Texas | Up to $270 million |
| Project Tundra | Center, North Dakota | Up to $350 million |
| Sutter Decarbonization Project | Yuba City, California | Up to $270 million |
Carbon Capture Large-Scale Pilot Program
Carbon management technologies are expected to play a significant role in decarbonizing the industrial sector. The Carbon Capture Large-Scale Pilot Program includes $937 million for projects that reduce CO2 emissions from electricity generation and hard-to-abate industrial operations.
Progress and status: applications under review. In February 2023, DOE opened applications for up to $820 million of this funding, applications were due in June 2023, and award negotiation announcements are expected this winter (2023-2024).
CO2 transport and storage infrastructure and permitting
Carbon Storage Validation and Testing Program
The Carbon Storage Validation and Testing Program builds on the CarbonSAFE program by providing $2.5 billion in funding for the development of new or expanded commercial large-scale carbon sequestration projects and associated CO2 transport infrastructure, including funding for the feasibility, site characterization, permitting, and construction stages of project development.
Progress and status: two rounds of project awards have been announced, the next application deadline is February 20, 2024, and additional announcements are expected through Q4 FY 2026.
In May 2023, DOE announced a total of $242 million for nine projects in Alabama, Colorado, Illinois, Louisiana, North Dakota, Texas, and Wyoming.
| Project Selection/Awardee | Location | Purpose | Total Potential CO2 Reduction |
|---|---|---|---|
| Bluebonnet Sequestration Project – Bluebonnet Sequestration Hub | Gulf Coast of Texas | Site characterization, front-end engineering design, permitting and environmental approvals | Capture and sequestration of 8 million metric tons (Mt) of CO2 per year for a 15-year period, with the potential for future expansion |
| Lone Star Storage Hub Project – BP Corporation North America Inc. | Gulf Coast of Texas | Site characterization and permitting of two commercial-scale storage sites | Store up to 15 million metric tons (Mt) per year |
| CarbonSAFE Eos: Developing Commercial Sequestration for Southern Colorado – Colorado School of Mines | Pueblo, Colorado | Collecting seismic data and drilling stratigraphic test wells to characterize primary and secondary target reservoirs | TBD |
| Magnolia Sequestration Project – Magnolia Sequestration Hub | Allen Parish, Louisiana | Site characterization, front-end engineering design, permitting and environmental approvals | Capture and sequestration of 4 million Mt of CO2 per year for a 15-year period with potential for expansion |
| Longleaf CCS – Southern States Energy Board | Bucks, Alabama | Site characterization, permitting, and National Environmental Policy compliance | 2.6 million metric tons (Mt) of annual CO2 emissions, or 78 million Mt of CO2 over 30 years |
| Timberlands Sequestration Project – Timberlands Sequestration, LLC | Monroe County, Alabama | Site characterization | 2 million metric tons of carbon dioxide (CO2) per year for 30 years |
| Illinois Basin West CarbonSAFE – University of Illinois | Springfield, Illinois | Site characterization | 50 million metric tons of carbon dioxide over 30 years |
| Coal Creek Carbon Capture: Site Characterization and Permitting – University of North Dakota Energy & Environmental Research Center | Central North Dakota | Site characterization and permitting | Reduce 95% of the CO2 emissions from the Coal Creek Station power plant, representing a 19% reduction of CO2 from North Dakota’s stationary sources |
| CarbonSAFE Phase III: Sweetwater Carbon Storage (SCS) HUB – University of Wyoming | Greater Green River Basin, Wyoming | Advance a commercial, multi-source, large-scale carbon capture and storage project | 50 million metric tons of anthropogenic carbon dioxide in the first 30 years of operation |
In November 2023, DOE announced a total of $444 million for 16 projects selected for award negotiation in 12 states, each with the capacity to securely store 50 or more million metric tons of carbon dioxide over a 30-year period. Of the 16 projects, nine will perform technical and economic assessments for potential CO2 storage complexes. The other seven projects selected have already completed subsurface condition studies and will soon move on to site characterization, planning, and permitting.
| Project Name/Awardee | Location |
|---|---|
| Carbon Storage Complex Feasibility for Commercial Development in Paradise, Kentucky – CarbonSAFE Phase II— Battelle Memorial Institute | Illinois |
| CTV III CO2 Storage Project in Sacramento Basin, California — Colorado School of Mines | Northern California |
| Virginia CarbonSAFE Storage — The Commonwealth of Virginia Department of Energy | Wise County, Virginia |
| California-Nevada CO2 Storage Project (CANstore) — Electric Power Research Institute | Northeastern California |
| Permian Regional Carbon Sequestration Hub (PRCS) — Omnia Midstream Partners LLC | Western Texas and Southern New Mexico |
| Atlantic Coast CO2 Emissions Storage Sink (Project ACCESS) — Southern States Energy Board | South Florida |
| Red Hills CO2 Storage Hub (RHCSH) Feasibility Study — Trifecta Renewable Solutions | Ackerman, Mississippi |
| Alaska Railbelt Carbon Capture and Storage (ARCCS) Project — University of Alaska Fairbanks | South-Central Alaska |
| The Williams Echo Springs CarbonSAFE Storage Complex Feasibility Study — University of Wyoming | South-Central Wyoming |
| Project Name/Awardee | Location |
|---|---|
| Monkey Island Carbon Storage Project — Advanced Resources International Inc. | Monkey Island, Louisiana |
| Project Crossroads: Appraising Storage Facilities to Decarbonize Northern Indiana, Northeastern Illinois, and Southwestern Michigan — BP Carbon Solutions LLC | Northern Indiana, Northeastern Illinois, and Southwestern Michigan |
| Four Corners Carbon Storage Hub: CarbonSAFE Phase III Project — New Mexico Institute of Mining and Technology | Northwest New Mexico |
| The Phoenix Project: Demonstration of Safe, Reliable Conversion of a Mature Oilfield for Dedicated CO2 Storage in the Permian Basin — Projeo Corporation | Western Texas and Southeastern New Mexico |
| A Critical Carbon Storage Hub for the Louisiana Chemical Corridor — River Parish Sequestration LLC | Baton Rouge/New Orleans, Louisiana |
| Tri-State CO2 Storage Hub; Tri-State Project — Southern States Energy Board | Ohio, Pennsylvania, and West Virginia |
| CarbonSAFE Phase III, Polk Carbon Storage Complex Detailed Site Characterization — Tampa Electric Company | Polk County, Florida |
Underground Injection Control (UIC) Class VI Wells Grant Program
IIJA provided funding for Underground Injection Control (UIC) Class VI Wells Grants to support states and Tribes in establishing and implementing state programs to regulate the geologic sequestration of CO2 through UIC Class VI wells.
Progress and status: In early November 2023, the EPA announced $48 million will be allotted evenly among the 25 state and Tribal recipients that submitted letters of interest in March 2023, as long as their project applications meet all necessary program requirements: Alabama, Alaska, Arizona, Colorado, Delaware, Georgia, Kansas, Kentucky, Louisiana, MHA Nation, Michigan, Mississippi, Montana, Navajo Nation, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Utah, West Virginia, and Wyoming. These entities will be eligible to apply for grants that meet the program’s requirements for a period of project performance of up to five years.
CATF recently released an interactive map of pending Class VI well applications, active Class VI Wells, and current Class VI primacy status by state.
Carbon Utilization Market Development
Carbon Utilization Procurement Grants Program
Incentivizing public procurement of clean alternatives to cement and steel can play a huge role in early market development. The Carbon Utilization Procurement Grants Program is intended to provide states, local governments, and public utilities or agencies with a 50% cost share to support them in purchasing products derived from converted carbon emissions.
Progress and status: Application period is open. In July 2023, the application period opened for $100 million in total funding, with applications due on April 30, 2024.
Carbon Removal
Regional Direct Air Capture (DAC) Hubs Program
The $3.5 billion Regional Direct Air Capture (DAC) Hubs Program aims to build the U.S. DAC industry from the ground up by supporting the development of four commercial-scale DAC hubs. Once realized, these four hubs will each remove more than one million metric tons of legacy CO2 emissions each year from the atmosphere. Deployment on this scale is not happening anywhere else in the world.
Progress and status: two DAC hubs selected for award negotiations. In August 2023, DOE announced $1.2 billion for the development of two commercial-scale DAC facilities in Texas and Louisiana, five projects to undertake FEED studies, and 14 projects to explore early-stage feasibility efforts. Additional funding opportunities are expected to follow the August announcement in the coming years to fulfill the program’s Congressional mandate.
| Build Awards | Location | Project Plans |
|---|---|---|
| Project Cypress – Climeworks Corporation and Heirloom Carbon Technologies | Calcasieu Parish, Louisiana | Capture more than 1 million tonnes of existing carbon dioxide (CO2) from the atmosphere each year and sequester the CO2 permanently deep underground |
| South Texas DAC Hub – 1PointFive | Kleberg County, Texas | Remove up to 1 million metric tons of CO2 annually with an associated saline geologic CO2 storage site |
| Design Awards | Location | Project Plans |
|---|---|---|
| California Direct Air Capture Hub Front-End Engineering Design and Planning – Electric Power Research Institute, Inc. | California | Design and plan the initial deployment and future development of CalHub, a regional DAC hub comprising both a planned storage site and pipeline transport of CO2 |
| Prairie Compass DAC Hub – University of North Dakota Energy & Environmental Research Center | North Dakota | Demonstrate lower-cost DAC technology from Climeworks and permitted CO2 storage facilities in North Dakota at egaton scale |
| Southwest Regional Direct Air Capture Hub – Arizona Board of Regents on behalf of Arizona State University | Southwest region | Develop the Southwest Regional DAC Hub to advance the design of a regional DAC hub |
| Southeast DAC Hub: Leveraging Legacy Work in Mobile Region – Southern States Energy Board | Alabama | Support the deployment of DAC technology in Mobile County, Alabama |
| The Wyoming Regional Direct Air Capture Hub – Carbon Capture Inc. | Wyoming | Develop the first phase of the Wyoming Regional Direct Air Capture Hub |
What’s next for U.S carbon management deployment
A successful carbon management economy in the U.S. requires the development of a suite of supportive infrastructure, from transportation networks including CO2 pipelines to Class VI wells to store carbon dioxide underground.
A shared CO2 transport network will bring down the cost of transporting CO2 for individual developers and, therefore, is a key pillar of a successful carbon management ecosystem. We anticipate announcements from DOE for its Carbon Dioxide Transport Infrastructure and Finance Innovation (CIFIA) program, which includes $2.1 billion in financing (loans, loan guarantees, grants, and administrative expenses) for that key type of shared, large-capacity CO2 transport infrastructure.
In addition to the carbon management funding opportunities from IIJA, CATF’s analysis has shown the higher 45Q credit level in the Inflation Reduction Act (IRA) has opened the door for more industries to abate their emissions using carbon capture, so there is a far greater demand for geologic storage of carbon dioxide. The acceleration of Class VI applications is encouraging, . In addition, early, meaningful, and good-faith engagement with communities is necessary for effective implementation of Class VI programs and the deployment of all carbon capture technology. EPA’s UIC Class VI Wells Program recognizes this, and eligible assistance under this program includes developing and implementing environmental justice tools and techniques. New developers must communicate with EPA early on in their application process. This proactive approach helps applicants comprehensively understand the Class VI permit process and what the permitting authority requires.
While implementation of IIJA’s carbon management provisions is well underway, agencies have until 2026 to allocate the remaining IIJA funds. CATF will continue to monitor and analyze as we look for additional program and project announcements in the coming years.
