The US Department of Energy (DOE) recently issued two funding opportunities for the development of carbon capture large-scale pilot projects and integrated carbon capture and storage projects at coal or natural gas generation facilities and at industrial facilities that are not purposed for electric generation.
As the development of infrastructure to safely store carbon dioxide (CO2) that is captured but not used as an input to other processes continues, these funding opportunities further the progress towards developing efficient and effective carbon capture, utilization, and sequestration (CCUS) technologies and CCUS deployment, which will play an important role in achieving the Biden administration’s net-zero emissions climate goals.
Both funding opportunities were issued by the DOE’s Office of Clean Energy Demonstrations (OCED), in collaboration with the Office of Fossil Energy and Carbon Management and National Energy Technology Laboratory. Awards made under these funding opportunities will be funded with funds that were appropriated under the Bipartisan Infrastructure Law (BIL).
Carbon Capture Large-Scale Pilot Projects
Of the $937 million that was appropriated for carbon capture large-scale pilot projects under the BIL, this funding opportunity makes available up to $820 million at a maximum of 70% federal cost share for up to 10 carbon capture large-scale pilot projects. The purpose of this funding opportunity is to further the development of transformational CCUS technologies that capture carbon emissions from existing coal or natural gas electric generation facilities and existing industrial facilities not purposed for electric generation.
The pilot projects that are funded under this opportunity must be integrated with commercial plant operations and conducted in the United States. They will generate operational data for verification and validation of the commercial potential of innovative technologies and will help inform future large-scale demonstration or commercial deployment plans.
Of interest are technologies that have completed a small-pilot scale prototype and will validate scaling factors to enable the large-scale pilot project to proceed to commercial scale demonstration or application after the large-scale pilot project is complete. This funding opportunity is focused on technologies that are less technologically mature (i.e., Technology Readiness Levels 5–7).
Concept papers for this funding opportunity are due by April 5, 2023, and full applications are due on June 21, 2023. Selection notifications are expected to be issued in September 2023.
Carbon Capture Demonstration Projects
The Carbon Capture Demonstration Project Program funding opportunity makes available up to $1.7 billion for approximately six domestic, commercial-scale, integrated carbon capture and storage (CCS) demonstration projects at up to a 50% federal cost share. This funding opportunity seeks proposals for projects that are designed to advance the development, deployment, and commercialization of technologies to capture, transport (if required) and store CO2 emissions from the following:
- Two projects at new or existing domestic coal electric generation-only or coal combined heat and power (CHP) facilities
- Two projects at new or existing domestic simple cycle or combined cycle natural gas electric generation, natural gas CHP facilities, or natural gas steam methane reformer facilities producing hydrogen for electricity generation
- Two projects at new or existing industrial facilities not purposed for electric generation (e.g., chemical production, mineral production, pulp and paper production, iron, and steel production)
These CCS demonstration projects must be integrated with commercial facility operations and conducted in the United States.
Of interest are CCS demonstration projects with existing sufficient technical detail to assess the readiness level of the proposed technologies and integrated systems to proceed into at-scale demonstrations, replication, and commercial deployment (i.e., technologies with a minimum Technology Readiness Level of 7). Proposed projects must demonstrate at least 90% CO2 capture efficiency over baseline emissions and a path to achieve even greater CO2 capture efficiencies for power and industrial operations. The captured CO2 must be stored in a secure, domestic, geologic, subsurface formation that has sufficient capacity to store CO2 from the demonstration facility.
Concept papers for this funding opportunity are due by March 28, 2023, and full applications are due on May 23, 2023. Selection notifications are expected to be issued in August 2023.
These funding opportunities further the development of carbon capture projects and technologies, which can serve as a critical solution to decarbonizing hard-to-abate industries including cement, steel, and refineries. They follow the recent enhancement and expansion of the Section 45Q tax credit that further incentivizes the deployment of carbon capture projects. In addition to increasing the tax credit rates that are available to carbon capture projects, which depend on the method of sequestration and the satisfaction of the wage and apprenticeship standards, the Inflation Reduction Act extended the window in which construction must begin by seven years to January 1, 2033 and reduced the capture threshold that a facility must meet to be eligible for the Section 45Q tax credit.
Additional funding to incentivize continued development of carbon capture projects is expected. The DOE stated that it anticipates issuing a third carbon capture funding opportunity announcement in the future for projects that are at the stage of performing Front-End Engineering Design studies and other early project work and that are not yet ready to apply.