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Technology Overview Policy Recommendations Recent Initiatives Technologies to Watch

Carbon Dioxide Removal Policy | State of Play

Technology Overview

Carbon dioxide removal (CDR) refers to technologies, practices and approaches that remove carbon dioxide (CO2) from the atmosphere. CDR does not refer to point-source carbon capture from the power or industrial sector. Though plants, like trees, have been absorbing CO2 for millions of years, and this is where carbon removal efforts have been focused in the past, the CDR space has evolved beyond tree planting. CDR solutions now encompass a wide range of solutions, including natural solutions such as afforestation and soil carbon sequestration, engineered methods such as direct air capture (DAC), and hybrid solutions such as biomass carbon removal and storage (BiCRS) and enhanced rock weathering (ERW), that combine natural and engineered technologies. Many of these CDR solutions are still in their nascent stages of development — therefore, the supply of engineered and hybrid CDR is currently low.

In their most recent report, the IPCC notes that CDR technologies are necessary to avoid the worst effects of changes in our climate, and World Resources Institute estimates that for the U.S., this equates to capturing 2 gigatons (Gt) annually by 2050. In modeling performed by the International Energy Agency (IEA), DAC technologies alone would need to capture more than 85 million metric tons of CO2 by 2030 and around 980 million metric tons by 2050, a steep scale-up from the 10,000 metric ton capture capacity of DAC today. Furthermore, estimates show that total global CDR capacity needs to reach 10 gigatons of CO2 annually by mid-century and continued increased removal capacity up to 20 GtCO2 per year by 2100.

Policy Recommendations

Continue Research Development and Demonstration- It is essential that continuous research, development and demonstration (RD&D) of diverse CDR solutions occur. Various DOE offices, the U.S. Department of Agriculture (USDA), and carbon removal companies have been actively investing in new types of CDR technologies to deploy at scale. These investments have historically assisted lab-scale research or fuel creation through biomass utilization. Beyond DAC, novel, innovative CDR technologies are increasing in their technology readiness level for demonstration and deployment. Broadening R&D focus areas and increasing the scale of research projects will allow for the maturation of a diverse set of scalable, efficient and economic carbon removal solutions.

Increased Coordination Between Federal Agencies- Interagency and interoffice coordination can ensure clear, effective and streamlined RD&D and commercialization of CDR technologies. Due to its cross-cutting nature, CDR exists in various different forms, from terrestrial to ocean CDR. There are various offices across DOE and other federal agencies, such as the USDA, Department of Defense (DOD) and the National Oceanic and Atmospheric Administration (NOAA), with valuable expertise and research projects in CDR. Therefore collaboration and information sharing between agencies such as NOAA, which specializes in marine activities, and the Advanced Research Projects Agency–Energy (ARPA-E), which has researched cutting-edge ocean-based carbon removal projects, would foster a unified effort and avoid redundancy.

Source: Adapted from the Adapted from ITIF Active Carbon Management: Critical Tools in the Climate Toolbox

Build Robust Competitive Purchasing Programs- Federal CDR purchasing programs, sometimes called advanced market commitments, are a significant opportunity for the federal government to improve its own CDR investment efforts by accelerating a portfolio of cutting-edge carbon removal solutions. The federal government has already opened the door for DAC companies to benefit from removing and storing CO2 through the 45Q tax credit. Thoughtful public sector purchasing of diverse CDR solutions would drive down the cost of best-in-class technologies that are far too expensive to go to the commercial market in their current form. Many tech companies have started making their own purchases and investments, but even for large companies like Microsoft, CDR technologies are too expensive to invest heavily in a meaningful way that would drive down costs. The federal government could reduce this risk by serving as a customer of CDR technologies that buyers are seeking but are not able to purchase due to cost or lack of supply.

Build low-cost, credible solutions- Bolstering CDR solutions by supporting new technologies coming to the market and strengthening confidence in natural carbon removal solutions will further help to develop new technologies. Currently, there is a small set of solutions that are performing well in the market today with the potential for full market commercialization. Solutions, including Charm Industrial’s biomass to bio-oil solution and Occidental’s partnership with Carbon Engineering to build the largest DAC facility in the world, would both permanently sequester significant tons of carbon dioxide. However, both of these solutions have one thing in common: they are currently too expensive to be efficient on a per-ton basis. Therefore, supporting these technologies through tax incentives, loan programs, competitive grants and advanced market commitments is important.

Recent Initiatives

Over the last several years, significant foundational work has set up the success of carbon removal technologies, including the following:

DOE Modernization of CDR RD&D: Authorized by much of the Energy Act of 2020, the US DOE began modernizing their CDR RD&D programs and allocating dedicated resources to these solutions through programs like the Carbon Negative Shot, launched in 2021, to spur innovation, research, manufacturing and deployment of CDR solutions. The Energy Act of 2020 also established the CDR Task Force & Report to map out the deployment of CDR solutions like DAC, enhanced mineralization, bioenergy with carbon capture and storage (BECCS), forest restoration, soil carbon management, & direct ocean capture; authorized Title XVII Innovative Energy Loan Guarantee Program to include synthetic technologies to remove carbon from the air and oceans; and notably established the $100M DOE Air Capture Prize for commercial & $15M for pre-commercial at DOE. The CHIPS and Science Act of 2022 also authorized a substantial $1 billion for the Office of Fossil Energy and Carbon Management (FECM) to conduct CDR R&D from fiscal year 2023 to fiscal year 2026.

Accelerating the commercialization of DAC: Following the tremendous efforts of the Energy Act of 2020, in 2021 the Infrastructure Investments and Jobs Act (IIJA) authorized and appropriated $3.5 billion for four regional DAC hubs with the ability to individually capture one million metric tons of CO2 annually. The IIJA also fully funded the $115 million Air Capture Prize, which was previously authorized in the Energy Act of 2020.

Tax incentives supporting CDR: Congress first established the bipartisan 45Q incentive as part of the Energy Improvement and Extension Act of 2008 to support point source carbon capture from power production or industrial facilities, which would support BECCS technologies. However, it wasn’t till 2018, when Congress updated 45Q, that DAC became eligible for the incentive. The industry experienced additional gains when the bipartisan Energy Act of 2020 extended 45Q by an additional two years. Most recently, under the 2022 tax package, the 45Q credit values were once again increased to levels that would encourage the widespread build-out of DAC.

Private sector commitments: The private sector has also made major investments in CDR with the launch of the $1 billion Frontier Fund to purchase permanent carbon removals until 2030, with members JPMorgan Chase, AutoDesk, Workday and H&M Group, Climeworks raising $650 million from investors, and JPMorgan Chase announcing their commitment to spend more than $200 million on a combination of carbon removal technologies.

Federal expansion of geologic sequestration capacity: The CHIPS and Science Act authorized the Carbon Sequestration Research and Geologic Computational Science Initiative with $50 million annually in funds from fiscal year 2023 to 2027 to fund research and development endeavors aimed at enhancing our comprehension of carbon sequestration within geologic formations. This multifaceted approach reflects the legislative commitment to advancing scientific understanding and technological innovation in the critical domains of carbon sequestration and geologic computational science.

Source: Adapted from theThe National Academies of Sciences, Engineering, and Medicine (NASEM) report on Negative Emissions Technologies and Reliable Sequestration A Research Agenda.

Technologies to Watch

Direct Air Capture (DAC)

Carbon Engineering, a Canadian-based company and a subsidiary of Occidental Petroleum, has a site in Ector County, Texas, in partnership with Occidental Petroleum. This carbon removal technology pulls CO₂ directly from the atmosphere, providing new opportunities for industries that have struggled to decarbonize, such as trucking, marine transport, aerospace and rail transportation.

CarbonCapture Inc, based in Los Angeles, CA, with a site in Wyoming where their DAC facilities use solid sorbents that soak up atmospheric CO₂ when cooled and release concentrated CO₂ when heated. This captured CO₂ can then be permanently stored underground or used to make synthetic fuels, low-carbon concrete, carbon black, or other industrial products that require CO₂.

Ocean-based Carbon Removal

Captura, based in Pasadena, CA, has developed a direct ocean capture (DOC) system that runs on two ingredients: seawater and clean electricity. Using Captura’s membrane and electrodialysis technology, it extracts CO₂ directly from seawater to be permanently stored or reused. Once the carbon is removed, the ocean naturally draws down CO₂ from the atmosphere to automatically rebalance. This creates a cycle that lowers overall atmospheric CO₂ over time.

Biomass Carbon Removal Solutions

Charm Industrial, based in San Francisco, CA, with a site in Fort Lupton, CO, uses plants to capture CO₂ from the atmosphere. Their process converts woody biomass into a stable, carbon-rich liquid known as “bio-oil” and stores it deep underground. This removes CO₂ permanently from the atmosphere, out of reach of wildfires, soil erosion and land use change. As of 2023, they have sequestered 6,420 metric tons of CO₂ and are under an offtake agreement with Frontier to permanently remove an additional 112,000 metric tons of carbon between 2024 and 2030.

Lithos Carbon, based in Seattle, WA, uses rocks’ natural ability to absorb carbon dioxide, or ERW, by speeding up the process and reliably measuring how much CO₂ is captured. The rock they use, basalt, is crushed up and applied to farmlands to remove carbon dioxide and potentially increase crop yields. They have raised more than $57 million in a deal with Frontier, the largest CDR purchase agreement to date, and expect to deliver by the end of 2028.

Carbon Dioxide Removal