DOE’s coal funding announcement misallocates critical funding for carbon capture demonstrations. The proposed new Office of Hydrocarbon and Geothermal Energy can fix it.

On September 29, the Department of Energy (DOE) announced a funding opportunity titled “Restoring Reliability: Coal Recommissioning And Modernization”, which closes on December 8.¹ The funding call will redirect up to $350 million from bipartisan carbon capture pilot and demonstration programs to maintain or reopen inefficient and aging coal plants that are scheduled for retirement.

Although the Infrastructure Investment and Jobs Act (IIJA) specifies that these funds must support facilities designed to capture carbon dioxide, the current opportunity does not immediately require carbon capture installation and is not designed to capture carbon in the future either. To meet statutory requirements and reflect congressional intent, the proposed new Office of Hydrocarbon and Geothermal Energy should amend the opportunity so that it supports carbon capture deployment rather than projects that will not reduce emissions. Doing so would also advance administration goals for reliable, affordable, and secure energy.

Without significant changes, this funding will yield no carbon capture projects, misdirect taxpayer dollars, and miss an important opportunity for American energy leadership.

1. The funding announcement targets coal plants that are inactive or will retire before 2032, making carbon capture infeasible

A carbon capture retrofit on a coal plant typically takes three to seven years to construct and then requires 12 to 20 years of operation to recover its capital costs. Units currently scheduled to retire before 2032, which this funding specifically targets, are therefore unlikely to run long enough to justify the additional expense of carbon capture. The plants DOE is targeting are old, inefficient units with rising maintenance needs, declining performance, and shrinking utilization, making it unrealistic to assume they would remain online long enough to add carbon capture at a later stage. The bipartisan funding in the IIJA is specifically designated for carbon capture demonstration. DOE must correspondingly target those plants that are the most suitable for carbon capture retrofits and innovative technology demonstration, not the least.

2. Even if eligibility dates are changed diluted funding cannot support a carbon capture demonstration

Even if DOE changed the retirement eligibility date, the funding still cannot support real carbon capture deployment because it is too diluted. The funding announcement allocates $350 million across up to five separate coal plants. A single carbon capture retrofit for a large coal power plant often requires more than $500 million in capital investment, while federal demonstration programs typically offer a 50% cost-share to derisk first-of-a-kind projects. Concentrating funding on 1-2 technically suitable facilities would therefore provide sufficient federal cost share to deliver at least one demonstration project.

3. No CO₂ capture, no enhanced oil recovery

Because the coal plants funded by this announcement will not capture carbon, this funding will not drive CO₂ storage, utilization, or enhanced oil recovery (EOR). A DOE report by the National Petroleum Council estimates that accessing U.S. CO₂-EOR storage capacity could produce decades worth of stranded oil, but only if gigatons of additional anthropogenic CO₂ are captured for injection.² This funding announcement does not deliver those quantities; in fact, it will not deliver any captured CO₂. Furthermore, CO₂ supply for EOR has declined since 2017 as production from natural CO₂ domes and CO₂ availability from gas processing have fallen.³ DOE must act quickly to ensure that more anthropogenic CO₂ is captured, not less.

CATF analysis shows that oil extracted using CO₂-EOR produced 37% lower emissions than conventionally produced barrels. This is because CO₂ injected during EOR is trapped underground through the same exact mechanisms that underpin dedicated geological storage: structural trapping beneath impermeable caprock, residual trapping in pore spaces, and long-term solubility and mineral trapping. For every barrel of oil produced, about 0.5 tons of CO₂ remain permanently trapped in the subsurface. Increased deployment of CO₂-EOR can provide the sustained CO₂ volumes and revenue streams needed to support the buildout of shared transport and storage infrastructure, which is foundational for achieving emissions-reduction targets.

Recommended actions for DOE 

1. Require carbon capture to be part of the federal cost share, not only near-term reliability upgrades, in order to meet the requirements set by Congress for funding two full-scale carbon capture demonstrations.
2. Limit eligible coal units to those with a demonstrated plants to operate beyond 2040, not 2032. Major carbon capture retrofits take 3-7 years to permit and complete and must operate for decades. DOE should focus on credible long-term operating plants to guard against retirement-date extensions made to secure funding.
3. Incorporate explicit capture performance requirements into the criteria for selection, to ensure federal funds are tied to carbon capture demonstration outcomes.

Conclusion 

By targeting the worst candidates for carbon capture retrofits – coal power plants that have retired or are planning to retire – the funding announcement contradicts the IIJA mandate to deliver six capture demonstrations, including two at coal plants, and to improve capture performance significantly.⁴ It also undermines the administration’s long-term energy goals, which are supported by securing large volumes of captured CO₂ for EOR.

Utilizing the bipartisan carbon capture pilot and demonstration funding for highest impact projects is essential for accelerating American innovation, supporting carbon utilization and energy production, and delivering on the intent of Congress. DOE should significantly revise or revisit the announcement before applications close on December 8.

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¹ DE-FOA-0003605. 

² U.S. Department of Energy, “Chapter Eight – CO₂ Enhanced Oil Recovery,” Table 8-1, p. 8-3: “Accessing this storage capacity could help produce 84 billion to 181 billion barrels of stranded oil.” https://www.energy.gov/sites/default/files/2022-10/CCUS-Chap_8-030521.pdf. 

³ According to Advanced Resources International (ARI), CO₂ supply for CO₂-EOR has fallen significantly in recent years. Total CO₂  supply declined from more than 3 Bcf per day in 2017 to just under 2 Bcf per day in 2022, a reduction of approximately 42%. The decline is due to reduced natural CO₂  production from geologic CO₂ domes and lower volumes captured from natural gas processing. During the same period, incremental oil production associated with CO₂-EOR declined by about 21 percent. Source: Advanced Resources International, “U.S CO₂ EOR Survey Updated to End of Year 2022, Prepared for CCUS 2024), https://ccusevent.org/portals/32/presentations/4016787.pdf. 

⁴ 42 U.S.C. § 16292(b)(1), (b)(4)(E)(ii). The statute directs DOE to establish “a carbon capture technology program for the development of transformational technologies” and requires six demonstrations, including “2 [that] shall be designed to capture carbon dioxide from a coal electric generation facility.”