DOE’s latest coal funding push misallocates taxpayer money. Here’s how the Department’s existing authorities can drive energy production with carbon utilization.

A second coal-focused notice of funding opportunity (NOFO), “Improving Efficiency, Reliability, and Flexibility of Coal-Based Power Plants,” misallocates carbon capture funding to keep America’s aging coal fleet online. Like the Department of Energy’s (DOE’s) “Restoring Reliability: Coal Recommissioning And Modernization” funding opportunity announcement, this NOFO would divert funding away from carbon capture innovation programs authorized by Congress in the Energy Act of 2020 during the first Trump administration. Instead, DOE proposes to use this $100 million to refurbish and extend the operation of aging coal plants. DOE now has a timely opportunity to align future funding decisions with energy production and carbon utilization objectives through the new Office of Hydrocarbon and Geothermal Energy (HGEO). Furthermore, DOE has clear statutory authority to advance carbon utilization programs in ways that support domestic energy production, reliability, and emissions reduction, an approach that Clean Air Task Force (CATF) supports.

CATF has closely tracked the implementation of the Infrastructure Investment and Jobs Act (IIJA) over the past four years and offers the following analysis and recommendations to help ensure these authorities are applied as Congress intended and deliver measurable deployment.

Why this FOA misses the mark

The Infrastructure Investment and Jobs Act is clear. Bipartisan congressional majorities directed DOE to establish a carbon capture technology program focused on the development and demonstration of transformational carbon capture technologies that significantly improve emissions reductions and environmental performance at coal and natural gas facilities. It explicitly requires that this program include large-scale pilot projects and demonstration projects for carbon capture technologies, as well as front-end engineering.

The statute provides that:

The Secretary shall establish a carbon capture technology program for the development of transformational technologies that will significantly improve the efficiency, effectiveness, costs, emissions reductions, and environmental performance of coal and natural gas use, including in manufacturing and industrial facilities.

The new funding opportunity does not support the purpose of the program: to improve carbon capture technology. DOE elevates two statutory program considerations —water and fuel use—and disregards the primary requirement from Congress to fund carbon capture technologies. Furthermore, wastewater treatment upgrades and dual-firing retrofits are not “transformational;” they are commercially mature and widely deployed operational practices used for regulatory compliance and fuel flexibility.

Deploying carbon capture to support domestic energy production using DOE authorities

While the current NOFO misses the mark, DOE has broader statutory authorities that can be used to deploy carbon capture in ways that directly support domestic energy production and emissions reduction. As the newly formed HGEO has indicated, enhanced oil recovery (EOR) is a priority area for R&D and deployment, creating a clear opportunity to design carbon capture programs that align with both industry capabilities and DOE’s energy production objectives.

EOR using CO₂ injection permanently sequesters CO₂ through well-understood permanent geologic storage processes (structural, residual, solubility, and mineral trapping), resulting in a net lifecycle emissions reduction of approximately 37% per barrel, while extending the productivity of existing assets.

Recent federal policy changes make this focus timely for HGEO. The One Big Beautiful Bill Act (OBBBA) of 2025 updated Section 45Q by retaining the $85-per-ton tax credit for carbon dioxide that is permanently stored and increasing the credit for carbon dioxide used in enhanced oil recovery to the same $85-per-ton level, up from $60 per ton under prior law. By maintaining the 45Q incentive and establishing parity in utilization, the legislation makes this a particularly timely opportunity to advance the deployment of carbon capture, utilization, and storage.

For CO₂-EOR to scale, however, significantly greater volumes of captured CO₂ will be required, particularly in states such as Wyoming and North Dakota where oil field productivity is declining, and where there is unmet injection demand for captured CO₂. Notably, oil and gas production remains a major source of state government revenue in both Wyoming and North Dakota, highlighting how well-designed federal carbon capture policies and programs that expand reliable CO₂ supply can simultaneously support domestic energy production, state fiscal stability, and emissions reductions.

Recommendations to DOE

DOE should advance carbon capture, utilization, and storage by addressing midstream infrastructure and capital barriers using existing authorities under both HGEO and DOE’s newly renamed Office of Energy Dominance Financing (EDF):

1. The Office of Energy Dominance Financing can drive the build-out of shared carbon dioxide pipelines, essential for scaling both enhanced oil recovery and geologic storage. Under the previous administration, the $2.1 billion Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) program was unable to support a single project amid industry concerns about slow and uncertain federal financing and permitting processes. IIJA made CIFIA appropriations available until expended, so aside from those funds that Congress chooses to transfer to another purpose, the $2.1 billion in CIFIA appropriations remain available to DOE’s new Office of Energy Dominance Financing (EDF), under the “Clean Coal, Oil and Gas & Hydrocarbons EDF tech sector.” Congress should not seek to transfer CIFIA funds to other programs, given the potential benefits to energy production and technological innovation that will accrue to U.S. taxpayers and the private sector from deploying these funds consistent with IIJA direction.
2. Prioritize speed of deployment and leverage “Other Transaction Authority” for CO₂ pipelines. In addition to potentially leveraging EDF’s new focus on speed of execution, HGEO could consider utilizing DOE’s Other Transaction Authority (OTA). OTA can streamline government contracting processes to tailor agreements and fast-track funding for critical projects. For example, in certain regions, modeled networks of carbon dioxide pipelines can be optimized to utilize existing rights-of-way for as much as half of the buildout, which would significantly ease the financial and regulatory barriers to infrastructure development.
3. Ensure funding opportunities have robust application pools by directly meeting industry needs and timelines before issuing a funding notice. Host convenings in key basins with industry and academia in Q1 2026 to identify necessary streamlining reforms and program design improvements to better design a funding notice that can meet industry needs for deploying carbon dioxide transport infrastructure. Convening design and focus can be informed by stakeholder comments on DOE’s interim final rule, “Energy Dominance Financing Amendments,” which amends DOE’s loan guarantee regulations to implement the EDF provisions of OBBA. DOE could also leverage Title 41 of the Fixing America’s Surface Transportation Act (FAST-41) to expedite permitting processes for carbon capture and carbon dioxide pipeline projects. Projects receiving FAST-41 permitting assistance benefit from the Permitting Council’s interagency coordination services and receive focused attention from deputy secretary-level senior leaders from all involved federal agencies, ensuring projects avoid bureaucratic delays.

Conclusion

Taken together, these recommendations illustrate how DOE can use its existing authorities, expertise, and convening power to advance carbon capture, utilization, and storage in ways that respond to industry needs, address infrastructure and water constraints, and support the department’s broader objectives around energy production and reliability. By prioritizing program designs and implementation pathways that enable scalable deployment across the CCUS value chain, and by clearly communicating timelines, engaging early with project developers, and convening industry, state regulators, and academic experts in key basins such as the Bakken and the Permian, DOE can help unlock private capital for CO₂ transport and storage while ensuring federal resources are positioned to deliver energy security.