Carbon Utilization 101

Carbon dioxide (CO₂) is a resource to be harnessed, from oil production and agriculture to critical minerals and advanced materials. Carbon is a fundamental building block of modern society. For decades, the United States has used carbon dioxide for energy production through enhanced oil recovery (EOR). Today, American innovators are expanding carbon’s role as a valuable domestic resource by using it to produce fuels, strengthen supply chains and create the materials that underpin our economy.

The market for products utilizing CO2 is rapidly emerging as a key part of America’s industrial and energy sectors, with global revenue projected to exceed $1 trillion by 2040. As carbon capture and removal technologies scale, increasing the supply of CO2, new utilization opportunities are emerging across the U.S. economy. Countries like China are investing in carbon capture, utilization and storage (CCUS) technologies and advancing demonstration-level projects, positioning themselves to dominate markets for products that rely on CO2 as a key input. To remain competitive, the U.S. must continue to support innovation and scale carbon utilization technologies at home, leveraging our existing capabilities to compete and lead globally.

Carbon Capture and Utilization

What is Carbon Utilization?

Carbon utilization, also known as carbon use or carbon conversion, refers to the use of captured CO2 from industrial sources or the atmosphere as a feedstock to produce fuels, materials, chemicals and other valuable commodities. In practice, CO₂ can serve as a building-block ingredient to create new products or as a working fluid in industrial processes that improve efficiency and unlock additional resource recovery. CO₂ can be used across a wide range of applications and sectors, supporting the production of goods that are central to the U.S. economy.

Carbon Utilization in the United States: Projects

Carbon Use Projects in the United States: Announced, In Development, and Operational

Types of Carbon Uses

American Energy Leadership: Enhanced Oil Recovery

Enhanced oil recovery using carbon dioxide (CO2 -EOR) strengthens domestic oil production, boosting energy security at home and for U.S. allies by reducing reliance on oil from adversarial nations. CO2-EOR is the most established use of captured CO2 and a key contributor to domestic oil production, enabling the recovery of 245,000 barrels of oil per day in the U.S. This process injects CO2 into mature oil fields to boost oil production and extend the life of existing assets, improving resource recovery in a cost-effective manner. During this process, much of the CO2 remains permanently stored underground, while the rest is recycled in a closed loop to support additional recovery. To make this possible, U.S operators inject approximately 68 million tons of CO2 annually for CO2-EOR.

Looking ahead, rising energy demand from reshored manufacturing, AI and data centers, combined with a growing global need for reliable American oil, will require a stable, scalable supply of domestic energy resources. Next-generation CO2-EOR technologies have the potential to unlock more than 60 billion barrels of additional oil using advanced techniques, including those that could require the injection of larger volumes of CO2. Ensuring access to a reliable supply of CO2 will be critical to sustaining and expanding this production, supporting domestic and global energy security.

Critical Mineral Independence

Similar to EOR, where CO2 can be used to bolster energy security, CO2 can also be used to extract additional critical minerals from the earth through what is often described as CO2-based mineral recovery. At ClearPath, we refer to these processes and technologies as Enhanced Mineral Recovery (EMR).

The U.S. remains 100 percent reliant on imports for 13 of the 60 minerals deemed “critical” by the U.S. Geological Survey (USGS), and EMR technologies could support domestic critical mineral production and strengthen U.S. supply chains.

EMR encompasses a range of technologies that use advanced techniques to retrieve more minerals and unlock previously inaccessible resources. These approaches can be deployed both underground (in-situ) and above ground (ex-situ) and are beginning to receive early-stage support from the Department of Energy (DOE) through programs such as ARPA-E’s MINER program.

In in-situ applications, compressed CO2, typically dissolved in water, is injected into deep rock layers where critical minerals are found. The CO2 then reacts with the minerals in the rocks to break them down and release the target minerals. While the CO2 is permanently stored underground, the leached minerals are pumped back to the surface, giving us access to additional critical minerals that were once locked underground.

In ex-situ applications, CO2 accelerates chemical reactions that extract valuable minerals or convert materials from industrial byproducts like mine tailings or steel slag into stable compounds in processing facilities, improving recovery rates. For example, CO2 can enhance the recovery of phosphoric acid, a key input for fertilizers, from phosphate, which was recently designated a U.S. critical mineral. 

Agriculture Innovation

By 2050, the world will need up to 60% more food to support a growing global population, making agricultural productivity and innovation more important than ever. Agricultural innovators are leveraging captured CO2 to support controlled growing environments and develop fertilizers and other inputs that increase crop yields, improve efficiency and create new revenue opportunities.

For decades, farmers have used supplemental CO2 in greenhouses to enhance plant growth, significantly increasing plant yields. For example, by increasing CO2 levels in highly-controlled environments like greenhouses, traditionally via compressed CO2 tanks or CO2 generators, farmers can increase crop yields by 40-100%. In addition, CO₂ can be converted into chemicals for different soil amendments that provide a wide array of agricultural benefits. Specifically, CO2 is used to produce urea fertilizer, which improves soil health and nutrient retention. By utilizing CO2, farmers can strengthen the agriculture sector, enhance food security and position the United States as a global leader in agricultural innovation.

Building with Carbon

In the manufacturing sector, CO2 can be used to produce stronger, more durable materials like concrete and other industrial products, without sacrificing quality or affordability. Captured CO2 can be injected into fresh concrete, mineralized to form stable materials and permanently store the CO2, or used as a feedstock for other industrial materials. Because many of these technologies can be integrated into existing cement production facilities, they offer a pathway to rapid, scalable deployment across the construction sector.

Expanding CO2 utilization in cement and concrete can help strengthen domestic supply chains to meet growing global demand. Similarly, using CO2 as a feedstock for plastics, which exist all throughout our supply chains, can help domestic plastic production remain stable, particularly when petrochemical feedstocks are less secure. Utilizing CO2 as a feedstock creates more resilient supply chains for products we rely on, while also enhancing U.S. manufacturing competitiveness by improving product performance and enabling American-made materials to compete globally against higher-emission producers like China.

Carbon Fueling America

Captured CO2 can be used as a key ingredient to produce synthetic fuels and chemicals, creating new pathways to supply reliable, domestically produced energy. Innovators can convert CO₂ into liquid fuels by combining it with hydrogen or using electricity. These processes can produce sustainable aviation fuel, methanol, synthetic diesel and other fuels compatible with today’s engines and infrastructure.

Beyond commercial markets, CO2-derived fuels present a strategic opportunity for national defense. Synthetic fuels can be produced on demand in remote or high-risk environments, minimizing the risks associated with transporting fuel into contested areas and enabling greater operational flexibility for the U.S. military. The Department of War (DOW), through the Defense Innovation Unit (DIU), has supported research, development, and demonstration (RD&D) of these technologies. For example, companies have partnered with the DOW to explore and demonstrate the application of these fuel technologies across military operations.

By leveraging CO2 as a feedstock for fuel production, the U.S. can diversify its energy supply, keep production at home and strengthen our national security.

Benefits of Carbon Utilization

Carbon utilization transforms captured emissions into valuable products, unlocking new market opportunities while strengthening American energy, manufacturing and technology leadership:

Policy Recommendations

Preserve and Maintain Improvements to 45Q: The Section 45Q tax credit provides financial incentives per ton of CO2 securely utilized or stored. Recent improvements under the Working Families Tax Cuts created parity across utilization, EOR and storage — supporting technologies that turn CO2 into a valuable commodity. Preserving the improved 45Q tax credit will strengthen U.S. manufacturing competitiveness, enhance energy security and reinforce American energy leadership.

Increase the Reliable Supply of CO2: Access to consistent, high-quality CO₂ is needed to unlock the full potential of carbon utilization technologies. Investing in RD&D of carbon capture and carbon dioxide removal (CDR) technologies will help ensure a scalable, reliable supply of usable CO₂ from a diverse range of sources, including point-source capture, direct air capture and biogenic processes. Legislation supporting innovation, commercialization and deployment of these technologies, such as the Carbon Removal and Emissions Storage Technologies (CREST) Act of 2023, will accelerate cost reductions, improve efficiency, bring the most competitive technologies to market and enable broader market adoption. 

Expand Carbon Utilization RD&D: Targeted federal RD&D is critical to advancing early-stage carbon utilization technologies and unlocking private investment. The Energy Act of 2020 authorized DOE”s Carbon Utilization Program, now housed within the Office of Hydrocarbons and Geothermal Energy (HGEO), to evaluate novel uses for CO₂ and demonstrate carbon utilization technologies across a range of industrial sectors. Programs like ARPA-E’s MINER initiative support research on using CO2 to unlock critical minerals, while initiatives such as the Carbon Dioxide Removal Purchase Prize help catalyze technologies that can provide and sustain a reliable, scalable supply of CO2. DOE could also coordinate with agencies such as the USGS and the U.S. Department of Agriculture (USDA) to advance cross-cutting carbon utilization opportunities across mineral, land and agricultural systems. Expanding these federal efforts will accelerate technology deployment and commercialization, broaden market opportunities and strengthen U.S. competitiveness.

Build CO₂ Pipeline Infrastructure: Expanding the nation’s CO2 pipeline network is essential to scaling carbon utilization technologies and connecting supply with demand. Projects require access to reliable, affordable CO2, which depends on a robust and well-connected pipeline system. Legislation supporting CO2 pipeline safety, R&D and streamlined interstate permitting will modernize regulations, reduce permitting bottlenecks and unlock private investment for CCUS infrastructure. This includes legislation like the PIPES Act of 2025 and the PIPELINE Safety Act of 2025, which would reauthorize the Pipeline and Hazardous Materials Safety Administration (PHMSA), as well as the Next Generation Pipelines Research and Development Act, which supports the development of advanced pipeline technologies and materials. Strengthening this infrastructure will enable more projects to move forward and reinforce U.S. energy and industrial leadership.

Carbon Dioxide Pipelines 101

Pipelines are critical infrastructures that move essential resources, such as water, oil, natural gas and other materials, from where they are produced or gathered to locations where they can be used or stored. Pipelines are everywhere. They are found beneath our highways, through our cities and communities. If you have a gas stove or plumbing, you have a pipeline in use at home. Today, there are over 5,300 miles of carbon dioxide (CO2) pipelines in the United States.

For over 50 years, pipelines have transported CO2 safely, quickly, efficiently and in large volumes. This experience makes pipelines uniquely equipped to facilitate the deployment of carbon management technologies such as carbon capture, utilization and storage (CCUS) and direct air capture (DAC). 

Carbon management technologies drive clean energy innovation and job creation at home, while strengthening U.S. global competitiveness and energy leadership abroad. The U.S. government has already invested billions in carbon management technologies, and from 2022 through mid-2024, the private sector announced over $26 billion in investments in these technologies. 

Today, more than 270 carbon management projects have been announced that are at various stages of development or are operational in the U.S. These projects make pipeline infrastructure essential. When CO2 is captured, it’s often not located near an available storage or use site and has to be transported to another location. Over half of cement plants in the U.S. are located outside a 100-mile radius of the nearest CO2 storage site. Pipelines are the best and safest way to move CO2 to these storage sites and other locations.

In this 101, you will learn about CO2 pipelines, including the importance of pipelines for U.S. energy security, how CO2 pipelines are regulated, why they are safe, and most importantly, policies that can enable the build-out of this infrastructure.  

Recommendations include:

What are Carbon Dioxide Pipelines?

CO2 pipelines move carbon dioxide – a non-flammable, odorless and stable gas – to locations where it can enhance energy production, make valuable products or be safely stored. CO2 is usually transported in a liquid or “supercritical” state, which is the easiest, most efficient way to transport CO2. A supercritical state means the CO2 is pressurized to the point it exhibits properties of both a liquid and gas.

Like most pipelines, CO2 pipelines are primarily located underground and out of sight. They are made with high-grade steel paired with anti-corrosive coatings and typically have a diameter of 4 to 24 inches – which is roughly between the length of a cell phone and a carry-on suitcase.

Where are Carbon Dioxide Pipelines in the U.S.?

CO2 pipelines have been safely operating in the U.S. for the last half-century. Historically, most CO2 pipelines in the U.S. have transported CO2 for enhanced oil recovery (EOR) operations. EOR is a highly engineered, well-understood process where CO2 is injected into the reservoirs of an existing oil field to increase oil recovery from depleting wells. During these operations, CO2 can remain underground, keeping it out of the atmosphere.

Of the 5,300 miles of CO2 pipelines across the U.S., most are in Texas, New Mexico, Wyoming, Oklahoma, Louisiana, North Dakota, Mississippi and Colorado. According to the U.S. Department of Energy, an estimated 30,000 – 96,000 miles of CO2 pipelines will be needed by 2050 to reach our emissions reduction goals. To put these numbers in perspective, this is only 1-3% the length of our existing 3,000,000 miles of oil and gas pipelines in the U.S. today.

Illustrative 2050 CO2 Pipeline Network

Sources include ClearPath analysis, National Carbon Sequestration Database Saline basins, and Princeton’s Net-Zero America spur and trunk line transmission expansions for the high-electrification scenario.

How are Carbon Pipelines Regulated?

Similar to other pipelines and linear infrastructure projects, CO2 pipelines are subject to several layers of regulations at the local, state and federal levels:  

Safety 

The Pipelines and Hazardous Materials Safety Administration (PHMSA), a federal agency within the U.S. Department of Transportation, regulates the safety of U.S. pipeline infrastructure and provides national standards for the safe and responsible design, construction, maintenance and operation of pipelines. In some cases, a state may assume regulatory authority over the safety of intrastate CO2 pipelines if it adopts rules that are as stringent as, or more stringent than, PHMSA’s minimum standards.

Environment, Water and Land

CO2 pipelines are subject to strict state and federal regulations that seek to protect water sources, agricultural land, the local environment and wildlife. These include the Clean Water Act, National Environmental Protection Act (NEPA), Endangered Species Act and more. Local and tribal communities are also engaged throughout these permitting processes. 

Siting and Construction 

Before building a CO2 pipeline, an operator must receive regulatory approval for the location and construction of the project. Unlike interstate natural gas pipelines, which are regulated by the Federal Energy Regulatory Commission (FERC), there is currently no option to site an interstate CO2 pipeline solely using a federal process. The siting and construction of both interstate and intrastate CO2 pipelines are largely regulated at the local and state levels, creating a patchwork of regulatory approaches and standards across the country. 

When siting and constructing a CO2 pipeline, each developer is subject to the unique eminent domain laws of each state, and many states lack clear eminent domain policies for these pipelines. Eminent domain, a last resort option for building major infrastructure projects, is a process by which the government can permit a company to use private property without the express permission of the landowner. This can only occur if the government determines that a property owner is fairly compensated and the project benefits the public. Eminent domain has been used to build roads, develop water supplies, construct pipelines and more. This process isn’t new, but it is rare. In fact, between 2008 and 2018, less than 2 percent of easements for interstate natural gas pipelines involved eminent domain. 

Rate Regulation

Rate regulation refers to a process by which an authority can regulate the price pipeline operators can charge for transporting a material (e.g., natural gas, oil). Unlike interstate natural gas and oil pipelines, there is no federal ratemaking authority for carbon pipelines. Today, the majority of carbon pipelines are private access and do not require rate regulation. However, this is poised to change as the carbon pipeline network grows and more entities require access to carbon transportation via common carrier or open-access pipelines.

Regulatory Landscape for Carbon Dioxide Pipelines

*PHMSA regulates interstate CO2 pipelines. PHMSA also regulates intrastate CO2 pipelines if a state does not have a certified safety program. If a state has a certified safety program, the state can only regulate intrastate pipelines, not interstate.

**CO2 pipelines are subject to various regulatory requirements pertaining to the environment, water, and wildlife under federal legislation such as the National Environmental Protection Act, Clean Water Act, Endangered Species Act, and more. Different federal agencies may have jurisdiction over permits and assessments required under these laws, such as the Army Corps of Engineers, the Fish and Wildlife Service, the Department of Energy and more.

Safety and Health

CO2 pipelines have a strong safety record. Over the last 20 years, zero fatalities have resulted from the few pipeline incidents that have occurred. CO2 is stable, non-flammable, and non-combustible. In fact, CO2 is used in fire extinguishers to put out flames. We also breathe CO2 in and out every day.

On the ground, pipeline operators take measures to ensure the safety and integrity of pipeline infrastructure. In addition to monitoring the integrity of the pipelines and conducting regular maintenance, operators mitigate corrosion by limiting the amount of water and other contaminants that enter a CO2 pipeline. For example, before CO2 enters a carbon capture system, contaminants must be removed, and before being placed into a pipeline, the CO2 is dehydrated to reduce the presence of water. 

A leak is the unintentional release of a substance or material from a pipeline. The overall CO2 leaked from pipelines is limited – approximately 0.001 – 0.005% of the total volume of CO2 that is transported through pipelines annually. To mitigate leaks, PHMSA requires new and refurbished CO2 pipelines to utilize remotely controlled or automatic shut-off valves, thus reducing safety risks and allowing first responders to act swiftly.

Operators regularly implement procedures to prevent and mitigate the impact of incidents, and PHMSA requires operators to communicate safety-related information with the public. CO2 pipelines are a vital part of American infrastructure, and operators are committed to working with PHMSA and other regulatory authorities to ensure robust safety standards for all pipelines.

What are the Benefits of CO₂ Pipelines?

CO2 pipelines benefit the public by boosting local economies, providing direct financial benefits for landowners, strengthening energy and national security and helping to lower carbon emissions:

Policy Recommendations

Establish Efficient Permitting Processes — A decentralized regulatory structure for siting interstate carbon pipelines has led to significant uncertainty for project developers who require access to pipeline infrastructure. An unpredictable regulatory environment can result in delays, increased project costs, and, in some cases, the cancellation of projects altogether. These challenges underscore the need for a more predictable, transparent and cohesive regulatory framework to support the safe and efficient deployment of interstate carbon pipeline infrastructure. The federal government – with agencies such as FERC – can play a critical role in supporting the coordinated and effective siting and permitting of carbon pipelines. Congress could consider establishing an optional federal siting pathway for interstate CO2 pipelines, allowing project developers the flexibility to choose a federal permitting process. 

Expand Research, Development and Deployment (RD&D) – Dedicated RD&D is critical to building out CO2 pipelines at the scale that is needed and enabling the commercialization of advanced materials and technologies for this infrastructure. Pipeline RD&D should focus on, among other areas, enhanced geohazard monitoring, advanced leak detection and monitoring, advanced pipeline materials and integrity, retrofitting natural gas pipelines for CO2 transport and more. Increased coordination between the Department of Energy (DOE) and other federal agencies, such as PHMSA, the National Institute for Standards and Technology (NIST) and FERC will also be key to expanding critical RD&D efforts for CO2 pipeline infrastructure. 

A key opportunity for Congress is to reintroduce and advance the bipartisan Next Generation Pipelines Research and Development Act, which passed the House of Representatives during the 118th Congress. This legislation would modernize our pipeline system by authorizing the U.S. Department of Energy’s research and development programs focused on various pipeline technologies and uses, including the transportation of carbon dioxide. 

Reauthorize PHMSA – PHMSA’s three-year authorization in the bipartisan PIPES Act of 2020 expired in September 2023. Reauthorizing and providing updated funding profiles for PHMSA’s activities and programs are critical for ensuring a safe and reliable pipeline network across the United States. During the 118th Congress, PHMSA reauthorization legislation, the PIPES Act of 2023, led by Chairman Sam Graves (R-MO), passed the House Committee on Transportation and Infrastructure with strong bipartisan support. This Congress, policymakers could reintroduce this legislation, which would mandate that the agency finalize updated CO2 pipeline safety rules.

By building CO2 pipeline infrastructure, we are not only building our capacity to reduce emissions and protect our environment, we’re also creating jobs, bolstering local economies and continuing to use the energy sources that make our country strong. In America, we’re not afraid to build — it’s what we do.

DAC Hubs: The IIJA Authorization Driving the Industry

Even if we hit the brakes on emissions today, there is still too much carbon dioxide (CO2) in the atmosphere to meet net zero by 2050. Engineer and Professor Klaus Lackner realized this back in 1999, at the 24th Annual Technical Conference on Coal Utilization and Fuel Systems in Clearwater, FL, where he proposed the concept of directly scrubbing CO2 from the air. Fast forward to 2021, and a momentous milestone was achieved as the world’s first direct air capture (DAC) plant turned on in Iceland.

In 2021, Congress also provided the U.S. Department of Energy (DOE) a staggering $3.5 billion through the bipartisan Infrastructure Investment and Jobs Act (IIJA) to develop four Regional Direct Air Capture (DAC) Hubs, each with the capacity to capture 1 million metric tons of CO2 annually. While much of the federal investments in the IIJA were directed towards traditional projects such as roads and bridges, one significant section managed to revolutionize an industry: the Regional Direct Air Capture Hubs.

U.S. DAC innovators are eager to hit the ground running with their technology. In August 2023, DOE announced up to $1.2 billion for two DAC Hubs slated for award negotiations: the South Texas DAC Hub and Project Cypress in southwest Louisiana, both designed to capture a million metric tons of CO2. In March, Project Cypress, the first to emerge from negotiations, received the first portion of their award funding — $50 million issued by the DOE’s Office of Clean Energy Demonstrations (OCED). Battelle, the project lead, has indicated that an additional $51 million in private investment will be mobilized to kick-start the initial phase of the Project Cypress DAC Hub. DOE is anticipated to finalize the remaining $1.2 billion in DAC grants soon and is set to release an additional $2.4 billion in follow-on funding.

When included in a portfolio of innovative, clean technologies, DAC has the potential to provide a game-changing solution to the global challenge of removing excess carbon dioxide (CO2) already in our atmosphere. Research shows DAC can remove CO2 at the volumes needed to meet net-zero targets AND it can do so quickly.

Though the two million-ton DAC Hub winners are garnering the spotlight, there are 19 additional projects that will support earlier stages of DAC project development, including feasibility assessments and front-end engineering and design (FEED) studies. Of the 19, 14 projects will enable efforts to explore the feasibility of a potential DAC Hub location, ownership structure and business model. The remaining five projects will perform FEED studies establishing and defining technical requirements focused on project scope, schedule and costs to reduce risk during later phases.

While stakeholders eagerly await the finalization of these awards, DOE is already looking ahead to its next task of accelerating DAC deployment potential by supporting mid-scale commercial demonstration facilities. Last month, DOE issued a Request for Information on how to approach the development of DAC facilities with lower capture capacities of approximately 5,000–25,000 tons per year. 

DOE’s Regional DAC Hubs represent a fusion of innovation and economic opportunity. Furthermore, these hubs offer a tangible solution to the pressing issue of climate change without resorting to heavy-handed regulations or mandates. By incentivizing private-sector investment in DAC technologies, the government empowers businesses to lead in reducing emissions while preserving economic competitiveness.

DAC Hubs showcase the potential for collaborative efforts between government and industry. The success of DAC technology hinges not only on its scalability but also on its capacity to integrate seamlessly into existing infrastructures and industries.

DAC is one of the many types of carbon dioxide removal (CDR) technologies that are taking on the challenge of removing CO2 from our atmosphere. Because of this, the program will lay the technical foundation for the future widespread commercialization of this critical suite of technologies. The yearly removal capacity for all U.S.-based CDR technologies is roughly one billion metric tons and 10 billion metric tons globally to reach net zero by 2050. With the DAC Hubs only clearing a percentage of the task, there is still a long road ahead. Other DOE initiatives like the CDR Pilot Prize are embracing a technology-inclusive approach to accelerate multiple CDR solutions, like enhanced weathering and bioenergy with carbon capture and storage, towards the billion metric ton goal. Bipartisan proposals, such as the Carbon Removal and Emissions Storage Technologies (CREST) Act of 2023 introduced by Senators Susan Collins (R-ME) and Maria Cantwell (D-WA), possess the ability to infuse the necessary resources toward this technology-inclusive DOE program. 

The United States is leading the way for supportive policies for DAC innovation. As the DAC narrative unfolds, it underscores the importance of bold, forward-thinking American policies like the IIJA, which have the potential to catalyze transformative change within the industry.

Earth, Wind, Fire: Geothermal Plants are Perfect for Direct Air Capture

Earlier this year, Houston-based geothermal energy developer Fervo announced an important new project to use its next-generation geothermal systems to power a direct air capture (DAC) facility. The announcement marks another milestone in the path towards a decarbonized economy and the expanded use of both geothermal and DAC technologies.

Geothermal + DAC = CO2 Reduction

The Need for Direct Air Capture of CO2

Deploying DAC technologies offer an exciting opportunity to add another tool to the toolbox for lowering global carbon dioxide (CO2) emissions by removing CO2 from the atmosphere.

Most decarbonization efforts focus on two areas. The first is keeping CO2 from going up into the atmosphere by generating electricity from technologies that don’t emit CO2 at all — think nuclear or renewables like hydropower and geothermal. The second effort is to use technology to capture the CO2 that would have been emitted from power plants and put it back underground – often referred to as carbon capture and storage (CCS).

The problem, unfortunately, is that there is already a heck of a lot of extra CO2 up in the atmosphere. DAC technologies offer a third option for decarbonizing by removing this CO2 from the air around us. If you have not heard of DAC, think of it as a massive vacuum cleaner that literally sucks carbon dioxide molecules out of the open air.

With recent Congressional action to pass bills with clean energy incentives, DAC technology is poised to see major growth moving forward. Last year, the U.S. Department of Energy (DOE) granted a series of awards to universities, utilities, and private businesses to study a variety of potential implementation models for DAC technologies ranging from use on nuclear and geothermal power plants to retrofitting steel and fertilizer plant operations.

Additionally, the Bipartisan Infrastructure Law (BIL), called for $3.5 billion in DOE funding to be used to establish four regional DAC hubs to, “demonstrate processing, transport, secure geologic storage, and/or conversion of CO2 captured from the atmosphere with DAC technology and accelerate commercialization of those technologies.” Project selections are expected later this summer and will provide another set of R&D opportunities for this technology.

Finally, under the tax package passed last year, the 45Q tax credit for CCS technologies included a special rule for DAC projects to expand tax incentives with the hope of enabling the industry to scale and export innovations on a global scale.

Why Geothermal?

Geothermal energy is heat that radiates from the core of the Earth to the subsurface, produced by the decay of radioactive materials and residual heat from the planet’s formation. Geysers, hot springs, volcanoes, and fumaroles are all locations where geothermal energy reaches all the way to the Earth’s surface. It is easier to access geothermal resources in these locations, but geothermal resources are actually available anywhere if one drills deep enough. Geothermal energy, like wind and solar energy, is an inexhaustible natural resource.

Enhanced or engineered geothermal systems (EGS) create opportunities to use hot, dry rock by enhancing the permeability of a specific geology or by adding water. EGS developers drill wells and inject water at high pressures to crack rock. After permeability has been improved to increase fluid circulation, hot water can be drawn to the surface through a production well and used for electricity generation.

U.S. Potential for Enhanced Geothermal Systems

Dots Indicate Existing Hydrothermal Sites

Shaded Regions Are Potentially Suitable for EGS

Similar to recent policies adopted to support DAC, Congress has taken steps to support the geothermal industry in an effort to spur growth and innovation and to expand the map in facilitating its use in projects outside just the Western U.S. In addition to support in the tax package, the BIL set aside funding for the DOE to fund EGS demonstration projects. In February of this year, the DOE’s Geothermal Technology Office announced they would fund up to seven EGS projects with applications due this summer.

Perfect Union

As of late 2022, there were 18 DAC plants in operation around the globe. Most of these are still smaller demonstration projects, but newly planned facilities like Occidental Petroleum’s in West Texas will be much larger, with the potential to remove up to 1 megaton (MT) of CO2 annually. To meet its net-zero goals, the U.S. could require 60 MT of CO2 removal each year by 2030, which would necessitate the buildout of an additional 60 plants similar in size to Occidental’s. Of note, Occidental has said that they could build up to 70 DAC projects globally by 2035 under current market conditions.

To result in a net carbon removal, DAC plants need electricity supplied by a 24/7 zero-emissions power source. Many DAC technologies also require access to a constant heat source, like that resulting from a geothermal plant, meaning EGS fits the bill perfectly.

Add to that the fact that the captured CO2 will need to be stored somewhere, usually in large underground geologic formations, and geothermal plant developers are uniquely qualified to pair with DAC plants. Companies like Fervo use next-generation technologies to survey the earth for their operations, and this same technology can be leveraged to help identify high-quality CO2 storage locations for DAC operations.

Today, the combo of geothermal and DAC is being used in Iceland, where Climeworks’ Orca plant has been removing CO2 from the atmosphere since 2021. Its system of fans, filters, and heaters are all powered by geothermal energy, and plans are underway to expand across the globe everywhere from Scotland to Texas.

As the U.S. market continues to take shape, recognizing the complementary nature of these technologies and their massive potential is producing a true ‘win-win’ for decarbonization. Not only will innovations in geothermal power allow for reliable, affordable, firm electricity generation, but when paired with energy intensive DAC projects, the impact will not just be ‘carbon neutral’ but could, in fact, be ‘carbon negative,’ offsetting past historical emissions.

Conclusion

This latest announcement is illustrative of the types of technological innovations that will be needed for the U.S. and the world to effectively decarbonize the economy in the future. Addressing climate change will necessitate an ‘all of the above’ approach to not only limit future emissions from reaching the atmosphere by expanding the use of technologies like hydropower, nuclear, geothermal, and renewables, but will also require cleaning up the current atmosphere. Continuing to prioritize support for innovative technologies like EGS and DAC and pairing these industries is not only promising for reducing emissions, but could also usher in a whole new innovative industry segment with global potential. 

Clean Energy Infrastructure Year Marches On

November 2022 marks the first anniversary of the bipartisan Infrastructure Investment and Jobs Act’s (IIJA) robust investments in energy demonstration projects. This law, and its forerunner the Energy Act of 2020, both earned broad bipartisan support to invest in American infrastructure innovation and pave the way for America to once again lead the world in breakthrough clean energy technologies.

With great investment comes great accountability. ClearPath has been actively tracking the programs authorized by the Energy Act of 2020 and funded through the bipartisan infrastructure law. These investments include more than $62 billion in energy programs at the Department of Energy (DOE). The majority of these programs are located in the new Office of Clean Energy Demonstrations (OCED), which received more than $21 billion in funding through the IIJA. ClearPath provided implementation recommendations for key demonstration programs that will be critical for innovative new technologies including advanced nuclear, carbon capture and storage, hydrogen hubs, enhanced geothermal systems, and critical mineral production to reach commercial viability. Continued engagement with the private sector will be essential to ensure these programs are structured for success in these critical public-private partnerships.

Over the course of the first year, the Department has taken the initial steps, including receiving public comments and stakeholder feedback, to stand up dozens of new programs. ClearPath has helped facilitate stakeholder discussions with utilities, oil and gas companies with carbon capture expertise, and hydrogen developers. The Department has been measuring progress through issuing Requests for Information and Notices of Intent for $32 billion worth of programs, but has yet to open competitive application periods for the majority of these programs, including the much-awaited Direct Air Capture and Carbon Capture Hubs programs. Major funding opportunities, like the Hydrogen Hubs and civil nuclear credit programs, currently have open application periods. Over the course of 2023, it is likely that the vast majority of the remaining programs will see both application periods and award selections.

The Department has announced the recipients for two major demonstration programs: The Advanced Nuclear Demonstration Program was partially funded through the bipartisan IIJA to provide more than $3 billion to projects located at two sites including the Terrapower project in Kemmerer, Wyoming and the X-Energy Reactor project in Richland, Washington. Additionally, the Department announced $2.8 billion from the Battery Manufacturing and Recycling Grant Program to support more than 20 projects located in more than a dozen states. These projects are designed to boost domestic capabilities across the battery supply chain, including commercial-scale facilities to process lithium, graphite and other battery materials, manufacture components, and demonstrate new approaches like manufacturing components from recycled materials. Done correctly, these projects will increase America’s competitiveness with China on critical minerals.

IIJA Award Selections to Date

In the new Congress, oversight related to the bipartisan infrastructure law will become an increased focus for both Chambers. While Congress will be interested in where the funds are being allocated, it will be equally important to understand structural challenges at the Department. One major challenge is hiring the necessary staff for the OCED to support these new programs and billions in federal funding. Additionally, Congress has yet to confirm nominees for the Underscretary for Infrastructure or a permanent Office director for OCED, although David Crane, the Infrastructure nominee, recently participated in his Senate confirmation hearing.

When it comes to oversight, it will be critical for policymakers to acknowledge the intent of these demonstration programs. While many will reflect past public failures that received federal funds, namely Solyndra, the reality is that demonstration projects are intended to be more like a test run than a final product. But the opportunities for success are greater, with companies and projects including Tesla and Vogtle that received early funding from programs offered by DOE having reached commercial status. By allocating these federal funds, DOE is absorbing risk the private sector would otherwise be unable or unwilling to take on. Much like the private sector investing in new technology, part of this risk will mean not every project succeeds. The critical piece will be to ensure this is part of the innovation cycle and not exacerbated by political interference.

This is where productive and robust congressional oversight can play an important role to protect taxpayer dollars and improve future research and demonstration projects for the next era of American innovation. While it is still early in the process for the major funding investments provided by the Energy Act of 2020 and the bipartisan infrastructure law, the first year past enactment has laid the groundwork for major announcements in the year ahead. ClearPath will continue to track these programs, award announcements, and the flow of federal funds through our Infrastructure Tracker Dashboards.

Recommendations for Implementing the Largest Clean Energy Investment Programs in U.S. History

In November 2021, Congress enacted the bipartisan Infrastructure Investment and Jobs Act (IIJA), which funded a wide-range of clean energy demonstration programs, including carbon capture, direct air capture, energy storage, geothermal, hydrogen, and industrial. The IIJA built on many of the authorizations in the Energy Act of 2020, which Congress passed and then-President Trump signed into law.

Now that Congress has allocated the funding, it is important for DOE to implement the IIJA demonstration programs consistent with Congressional direction and maximize the impact of taxpayer resources. DOE’s track record of funding large-scale demonstration projects is mixed, but the Department can increase the chances of success by adhering to principles of responsible program management, including rigorous merit review standards and adopting a milestone-based approach, so that projects with the most technical merit get funded.

As DOE prepares to issue funding opportunities in the coming weeks and months, ClearPath has developed a series of memos with recommendations for implementing the IIJA demonstration projects. Each of these memos includes similar principles related to rigorous milestones and responsible stewardship, but each also includes unique recommendations tailored to specific technologies. Brief summaries are included below.

Carbon Capture, Utilization, and Storage (CCUS) Demonstration Program

Read the memo by Jena Lococo

The IIJA included nearly $12 billion for CCUS programs, with nearly $2.54 billion for a demonstration program authorized by the Energy Act. DOE should fund projects with the lowest technical risk and highest potential to deliver on time and on budget. Projects should be large enough to demonstrate on a commercial scale, but not so large that the complexities from scaling up from pilot testing are unclear. DOE should also ensure projects have stable revenue streams and offtake agreements. Finally, the federal government should expedite permitting under the National Environmental Policy Act (NEPA) and EPA’s Underground Injection Control Class VI requirements.

Carbon Dioxide Infrastructure Finance and Innovation Act (CIFIA) Program

Read the memo by Grant Cummings

In the IIJA, Congress appropriated $2.1 billion for the CIFIA program to support the buildout of infrastructure to transport CO2 from where it is captured to where it can be utilized or securely sequestered underground. In addition to this funding, the IIJA allows eligible proposals to take advantage of a secured loan of up to 80% of the project cost. DOE should prioritize geographically diverse projects and be mindful of infrastructure routes already identified by project developers. The federal government should also modernize the NEPA process and couple CIFIA projects with other CCUS programs supported within the IIJA to ensure the deployment of critical CO2 infrastructure.

Direct Air Capture Hubs

Read the memo by Savita Bowman

The IIJA provides $3.5 billion for four regional Direct Air Capture (DAC) hubs, each with the capacity to capture 1 million metric tons (MMt) of CO2 annually. In selecting hub locations, DOE should leverage existing infrastructure and consider co-locating with DOE’s hydrogen hubs and CCUS demonstration sites to leverage pipeline infrastructure. DOE should also set clear timelines and milestones, including ensuring that projects have secured or are working to secure an offtake agreement for their captured CO2 at the time of application.

Energy Storage Demonstration Programs

Read the memo by Alex Fitzsimmons

The IIJA included $505 million for energy storage demonstration projects that were authorized by the Energy Act. DOE should prioritize a diverse portfolio of long-duration, grid-scale energy storage technologies capable of achieving DOE’s performance goals under the Energy Storage Grand Challenge and Storage Shot. Moreover, DOE should develop energy storage technologies that can be manufactured in the U.S. and exported globally, advance technologies that strengthen U.S. energy security and do not depend on supply chains controlled by foreign adversaries, and leverage synergies with other IIJA demonstration programs.

Enhanced Geothermal Systems (EGS) Demonstration Program

Read the memo by Alex Fitzsimmons

The IIJA included $84M for EGS demonstration projects from FY22 to FY25, as authorized by the Energy Act. The Energy Act directed DOE to fund four geothermal demonstration projects for power production or direct use, utilizing diverse geologic settings and development techniques. As such, DOE should prioritize technology diversity, geographic diversity, and use case diversity. DOE should also adopt a milestone-based approach and coordinate with DOE’s new Office of Clean Energy Demonstrations (OCED), as there are several other programs under OCED for which geothermal is eligible to compete for funding.

Industrial Demonstration Program

Read the memo by Alex Fitzsimmons

The IIJA included $500 million for industrial emissions reduction demonstration projects that were authorized by the Energy Act. In the Energy Act, Congress directed DOE to focus on a wide range of industrial processes and technologies, with an emphasis on heavy industrial sectors such as iron and steel, cement and concrete, and chemicals. As such, DOE should focus on developing a demonstration program that is both sector-specific and technology-inclusive. DOE should prioritize investments in heavy industrial sub-sectors, leverage synergies with related DOE demonstration programs, and coordinate the demonstration program with the Advanced Manufacturing Office’s (AMO) proposed Manufacturing USA Institute.

Regional Clean Hydrogen Hub Program

Read the memo by Natalie Houghtalen

The IIJA included multiple hydrogen provisions, including $1 billion for a Clean Hydrogen Electrolysis Program, $500 million for a Clean Hydrogen Manufacturing program, and $8 billion for Regional Clean Hydrogen Hubs. Regarding the hydrogen hubs, DOE should consider awarding more than four hubs (the statutory minimum), pursue a multi-solicitation and milestone-based approach, clarify the role of the DOE National Laboratories, establish thoughtful and realistic deadlines, prioritize projects that focus on multi-sector integration and match hydrogen production with end use, and co-locate the fossil-based hydrogen hubs with the IIJA CCS projects.

Conclusion

Congress’ bipartisan IIJA demonstration programs represent an unprecedented opportunity to scale and de-risk emerging clean energy technologies. With thoughtful implementation that focuses on maximizing the impact of taxpayer resources and upholding the principles of responsible project selection and management, DOE can help position the U.S. to build cleaner faster and lead the world in the commercialization, manufacturing, and export of clean energy for decades to come.

Clean Energy Manufacturing Should be Done in America, Not China

At ClearPath, we’re focused on accelerating technological innovation to advance a cleaner and more reliable energy system. Yet too often, innovative technologies invented in America are scaled and manufactured in foreign countries like China who don’t share our values, or our environmental standards. That’s why we are constantly seeking solutions to make sure clean energy innovation promotes U.S. jobs, growth, and security.

A strong U.S. industrial sector is essential to ensuring new technologies invented in the U.S. can be manufactured domestically, rather than in China, which would result in more jobs and fewer carbon dioxide emissions. Manufacturers employ more than 12 million Americans and account for about one-third of U.S. energy consumption. Those impressive numbers mean the U.S. Department of Energy’s Advanced Manufacturing Office (AMO), the only technology R&D office in the federal government dedicated entirely to improving the energy productivity and competitiveness of the U.S. industrial sector, has an outsized role to play.

With the recent passage of the Energy Act of 2020 and a strong foundation of initiatives seeded in the last few years, AMO is positioned as a unique lever to accelerate clean energy innovation in ways that promote America’s economic growth and global competitiveness.

AMO is Positioned as a Unique Lever to Accelerate Clean Energy Innovation

AMO: The Force Multiplier for Clean Energy Innovation

AMO resides as one of 11 Department of Energy (DOE) technology offices within the Office of Energy Efficiency and Renewable Energy (EERE). EERE’s total annual funding is more than $2.8 billion, with AMO essentially tied with the Vehicle Technologies Office (VTO) as EERE’s largest technology offices by budget. AMO has enjoyed strong bipartisan support in recent years, with annual funding rising from $257 million in 2017 to $395 million in 2020, a 53% increase in three years. Given how crucial manufacturing is to our economy, this is the type of targeted, goal-oriented federal investment lawmakers of both parties can support.

I recently served as the Deputy Assistant Secretary for Energy Efficiency at DOE, where part of my portfolio included overseeing AMO’s growing budget and staff. AMO is organized around three subprograms: R&D Projects, R&D Consortia, and Technical Partnerships. The consortia portfolio included overseeing AMO’s Manufacturing USA Institutes and Energy Innovation Hubs, public-private partnerships that cover diverse topics from advanced composites, smart manufacturing, and critical materials, among others. It also included establishing two new consortia, one focused on cybersecurity for industrial control systems, and the other on water innovation and security. Through these institutes and hubs, AMO has established a national network of partnerships dedicated to accelerating industrial innovation and strengthening U.S. manufacturing competitiveness.

Since 2017, goal-oriented investments for AMO allowed us to strengthen high-impact existing programs while seeding new, cross-cutting initiatives. Most recently, in January 2021, AMO invested more than $123 million in 46 projects across 23 states on a wide range of advanced manufacturing technologies, including more than $20 million for innovative iron and steelmaking processes and another $20 million for carbon capture and direct air capture at industrial facilities – AMO’s first competitive solicitation on carbon capture.

AMO Invested More Than $123 Million in 46 Projects Across 23
States on a Wide Range of Advanced Manufacturing Technologies

The following list describes some of the most promising AMO initiatives seeded in the last few years. These initiatives form a foundational investment portfolio for Congress and DOE to build upon to accelerate clean energy innovation across sectors.

Critical Minerals Supply Chain

Energy storage is a crucial lever to integrate variable renewables, improve reliability, and enhance the efficiency of a rapidly evolving electric grid. Yet much of the battery storage supply chain is dominated by China, including the supply of critical minerals such as cobalt and lithium. AMO plays a key role advancing the Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals. Part of that strategy, published in 2019, includes expanding investments across the critical mineral supply chain, from mining to separations, processing, and recycling. AMO conducts R&D in all of these areas, but recently expanded its focus on the separations and processing part of the supply chain, a key weakness that America must overcome to achieve mineral security from China.

In January 2020, AMO awarded more than $50 million in funding for critical minerals separations and processing technologies, including nearly $37 million in demonstration projects – AMO’s first demo-scale critical minerals awards. Building on the success of AMO’s long-running Critical Materials Institute, managed by Ames National Lab, these scale-up projects provide a solid foundation on which AMO can build out a portfolio of critical mineral demonstration projects in the coming years.

Battery Manufacturing

Reducing dependence on foreign sources of critical minerals is just one piece of the battery supply chain. The U.S. must also support a competitive battery manufacturing sector for lithium-ion and advanced battery chemistries. As part of DOE’s Energy Storage Grand Challenge (more on that here), AMO has ramped up investments in advanced battery manufacturing technologies. Last year, AMO and VTO co-funded a Battery Manufacturing Lab Call, which provided $15 million in funding to help private sector battery developers de-risk and scale their technologies at the DOE National Lab’s distributed federation of user facilities.

Separately, AMO invested more than $45 million in competitive projects to develop innovative battery manufacturing technologies, including roll-to-roll processing that enables fast, efficient battery production at scale. While a good start, demonstration-scale investments will be needed to de-risk and scale-up a domestic industrial base for advanced batteries.

Battery Recycling

The final challenge of securing America’s battery supply chain lies with addressing the end-of-life. While demand for batteries used in electric vehicles and stationary energy storage will grow dramatically in the coming years, less than 5% of lithium-ion batteries are currently recycled.

To address this growing problem, in 2019 AMO and VTO launched two new programs: the Battery Recycling Prize, a $5.5 million series of prize competitions to spur innovative solutions to battery recycling, and the ReCell Center at Argonne National Lab, the country’s first federal advanced battery recycling R&D center. With cost-effective advanced recycling technologies, the U.S. can mitigate the environmental legacy of spent batteries while reducing our dependence on foreign sources of critical minerals.

By building upon recent AMO investments in critical minerals, battery manufacturing, and battery recycling, Congress and DOE can accelerate the development of a competitive U.S. battery supply chain.

Hydrogen at Scale

EERE’s Hydrogen and Fuel Cell Technologies Office (HFTO) leads the Department’s H2@Scale program, an initiative to enable affordable hydrogen production and use across multiple sectors, including metals refining, ammonia production, and chemical processes. Achieving the H2@Scale vision requires extensive cross-sector collaboration, which is why DOE recently published its 2020 Hydrogen Program Plan. Co-signed by the DOE Assistant Secretaries for EERE, Fossil Energy, and Nuclear Energy, the Program Plan is a strategic framework to coordinate and accelerate hydrogen RD&D.

The plan includes expanding collaboration with AMO to enable domestic manufacturing of electrolyzers for hydrogen production, hydrogen storage tanks, and fuel cells, among other areas. Most recently, AMO co-funded $22 million in projects focused on electrolyzer manufacturing and enabling the use of hydrogen in steelmaking processes. Implementing the DOE Program Plan, including by expanding AMO’s hydrogen portfolio, will be key to accelerating the hydrogen economy.

Industrial Carbon Capture

While DOE’s Fossil Energy Office leads the Department’s carbon capture portfolio, in 2020, AMO initiated first-ever investments in carbon capture technologies. In January 2021, as part of the massive multi-topic funding opportunity discussed above, AMO awarded $20 million for nine early-stage R&D projects to integrate carbon capture and direct air capture into industrial processes. Led primarily by universities, the projects will provide key insights from which DOE can shape future industrial carbon capture initiatives. Go deeper with this ClearPath Tech 101: Intro to Carbon Capture.

Regional Innovation Hubs

In the last three years, AMO has made substantial investments to expand the capabilities of key user facilities at the DOE National Laboratories. When provided a clear mission and directed to support activities the private sector would otherwise not conduct on its own, DOE’s user facilities can foster hubs of innovation and regional economic development, particularly in parts of the country that often struggle to compete for federal funding. Such facilities include the Manufacturing Demonstration Facility at Oak Ridge National Lab in Tennessee, the Critical Materials Institute at Ames National Lab in Iowa, and the Materials Engineering Research Facility at Argonne National Lab in Illinois.

AMO Has Made Substantial Investments to Expand the Capabilities
of Facilities at the DOE National Laboratories

Most recently, AMO provided seed funding for a partnership between Youngstown State University (YSU) in Ohio and Oak Ridge National Lab to establish the Energy Storage Workforce Innovation Center at YSU. The training center will support battery manufacturing research and workforce needs in the “Voltage Valley” region of Northeast Ohio. Strategic infrastructure investments such as these can be leveraged to spur economic growth, attract private sector capital, and promote workforce development across the country.

As clean energy innovation continues to accelerate, America’s manufacturing competitiveness must be a top priority. Americans have seen too many industries and too much intellectual property shipped overseas. In emerging energy technologies, we have a once-in-a-generation opportunity to create and sustain entirely new industries here in America. We can also reduce emissions by returning manufacturing to the U.S., where environmental standards are tougher than in China. But that won’t happen without a sharp focus. Fortunately, in the last few years, AMO has established unique capabilities and seeded new initiatives to position the U.S. for global leadership in advanced manufacturing. The clean energy industries of the future are being created today – the U.S. will either cede or lead.

View more of Our Take and let us know what you think at jaylistens@clearpath.org.

A New Tool In The CO2 Reduction Toolkit: Direct Air Capture (DAC)

Direct Air Capture (DAC) represents exciting opportunities and technologies that a number of great innovators — as well as some great conservatives — are adding to the toolkit to lower global carbon dioxide (CO2) emissions or remove it from the atmosphere.

There are many efforts underway for keeping CO2 from going up into the atmosphere, and ClearPath spends the majority of its time working on technologies that either don’t emit CO2 at all — think nuclear or renewables like hydropower and geothermal — or technologies that capture all of the CO2 that would have been emitted from power plants and put its back underground.

BUT, there’s already a heck of a lot of extra CO2 up there in the atmosphere. If you have not heard of Direct Air Capture, think of a massive vacuum cleaner that literally sucks carbon dioxide molecules out of the open air. Despite all the interest, this technology is still in it’s very early days. Watch ClearPath’s latest whiteboard video about what’s on the path ahead for DAC.



View more of Our Take and let us know what you think at jaylistens@clearpath.org.