DOE Announces $3.1 Billion Now Available for Carbon Management Technologies

In December 2024, the U.S. Department of Energy (DOE) opened the second round of two funding opportunities under the Bipartisan Infrastructure Law (BIL), totaling $3.1 billion. These initiatives – the Regional Direct Air Capture (DAC) Hubs and the Carbon Capture Demonstration, Large-Scale Pilots and Networked Demonstration Commercialization programs – are critical to advancing the deployment of carbon management technologies and supporting technology readiness levels (TRL) across the United States.

Deadlines: Letters of intent and concept papers for the Regional DAC Hubs are due by Jan. 31, 2025, at 11:59 p.m. ET, and concept papers for the Carbon Capture Demonstration, Large-Scale Pilots and Networked Demonstration Commercialization Program are due by March 1, 2025, at 5:00 p.m. ET.

Holland & Knight is proud to have supported clients who secured $543 million in funding across the first round of both programs.

The BIL allocated nearly $7 billion in total for both programs. The Regional DAC Hubs program aims to establish up to four hubs, each capable of capturing at least 1 million metric tons of CO₂ annually from the atmosphere. Projects must capture and sequester, utilize, or sequester and utilize CO₂. In the first round of funding, the DOE awarded two hubs in August 2023, leaving at least two hubs to be funded in the second round. In February 2024, the DOE issued a request for information (RFI) soliciting input on the merits of funding mid- and large-scale DAC facilities, as well as developing price supports for carbon. While the newly released proposal includes a topic area for mid-scale DAC facilities, the DOE did not include opportunities for price supports. Furthermore, the DOE added a topic area to fund the development of equipped host sites that provide shared resources for DAC developers at the early stages of commercialization.

The Carbon Capture Demonstration and Large-Scale Pilots program focuses on accelerating the deployment of carbon management technologies in power generation, industrial and other commercial applications. In 2023, the DOE awarded funding to three demonstration projects (one for coal-fired power generation and two for natural gas-fired power generation) and eight front-end engineering design (FEED) studies. New to this proposal is the "networked demonstration commercialization program," which is focused on ensuring that the federal government supports market confidence in carbon capture infrastructure investments.

The Regional DAC Hubs Program

This program supports the design, construction and operation of mid- and large-scale DAC facilities and infrastructure. Building on the investments from the first funding round, the program aims to establish a robust ecosystem of projects. By offering support at various stages of commercialization, it seeks to accelerate the development and expansion of additional DAC hubs.

Topic area and funding information can be found below:

Topic Area 1 (TA-1): Infrastructure Access Platforms (IAP)

• Goal: Through TA-1, the DOE intends to provide funding to create a host site – or IAP – for DAC developers at the early stages of commercialization.
  • IAPs will be expected to provide access to shared post-regeneration CO₂ conditioning processes, such as dehydration, oxygen removal and compression, and access to the other critical elements that are required to make a DAC facility commercially viable, namely: 1) clean energy and 2) CO₂ offtake, such as geologic storage, enhanced oil recovery, integration into a carbon-based conversion process, or utilization in a valuable product and/or a pipeline or other mode of CO₂ transportation to those facilities if not co-located at the IAP.
• Funding will go toward the design, permitting, National Environmental Policy Act (NEPA) review, community benefits activities, construction and operation of an IAP.

Topic Area 2 (TA-2): Mid-Scale Commercial (MSC) DAC Facilities

• Goal: Through TA-2, the DOE seeks to fund MSC DAC facilities as supplemental contributors to the creation and expansion of four regional DAC hubs with mega-ton capacity.
• Each MSC facility is expected to target a nominal gross capture capacity of between 2,000 and 25,000 tons per annum (TPA).
• Applicants will also need to convey a compelling vision for subsequent deployments of each technology of at least 100,000 TPA following a successful mid-scale demonstration, whether at the proposed site or another site.
• Funding may go toward the design, permitting, NEPA review, community benefits activities, construction and early operation of an MSC facility. As needed, funding may also support developing or creating access to clean energy and carbon transportation, storage, and/or utilization facilities and resources.
• The DOE may also offer TA-2 projects funding for early design-phase work for a large-scale facility as a fast track toward a potential future TA-3 award to shorten the timeline between initial mid-scale and subsequent large-scale facilities.

Topic Area 3 (TA-3): Large-Scale Commercial (LSC) DAC Facilities

• Goal: Through TA-3, DOE seeks to fund LSC DAC facilities as the primary contributors to the creation and expansion of four regional DAC hubs with megaton capacity.
  • Each LSC facility is expected to target a nominal gross capture capacity of at least 25,000 TPA.
  • Applicants will also need to convey a compelling vision for subsequent deployments of each technology of at least 10 times the proposed facility capacity.
• Funding may support the design, permitting, NEPA review, community benefits activities, construction and early operation of an LSC facility. Funding may also support developing or creating access to clean energy and carbon transportation, storage, and/or utilization facilities and resources.

Key Dates:

• Pre-Application/Concept Paper Deadline: Jan. 31, 2025, 11:59 p.m. ET
• Application Deadline: July 31, 2025, 11:59 p.m. ET
• Anticipated Selection: December 2025

Point Source Carbon Capture Large-Scale Pilots, Commercial Demonstrations and Networked Demonstration Commercialization

This Notice of Funding Opportunity (NOFO) seeks to support projects that improve the efficiency, effectiveness, affordability and environmental performance of carbon capture technologies across various applications. Statutory requirements mandate funding for six facilities: two coal-fired power plants, two natural gas-fired power plants and two industrial facilities. Since the natural gas requirement has already been fulfilled in the prior round, the open NOFO focuses on meeting the remaining statutory obligations.

Topic area and funding information can be found below:

Topic Area 1 (TA-1): CCUS Demonstration

• Goal: TA-1 will support commercial-scale demonstrations of integrated carbon capture, transport and storage at up to one coal-fired power plant and up to two industrial plants with a minimum capture capacity of 300,000 metric tons of CO₂/year.
• Demonstrate the technical and commercial viability of established carbon capture technologies (TRL >7) in both new applications and at commercial scale.
• TA-1 will be divided into two subtopic areas:
  • TA-1a- CCUS Demonstration at a Coal Electric Generation Facility
  • TA-1b- CCUS Demonstration at an Industrial Facility Not Purposed for Electric Generation

Topic Area 2 (TA-2): Large-Scale Pilots

• Goal: TA-2 will support large-scale pilot projects demonstrating transformative technical advances in point source carbon capture. TA-2 is designed to improve the economics of carbon capture by enabling the construction, commissioning and testing of approaches with preferably increased capture efficiencies, reduced cost, reduced emissions and improved environmental performance at a large pilot scale.
• Demonstrate first-of-a-kind transformational technologies (TRL 5–6) at the large pilot scale
• TA-2 is divided into two subtopic areas:
  • TA-2a: Large-scale pilot for applicants that have commissioned a small pilot prototype that has achieved a steady-state runtime of 1,000 hours with a recommended minimum capture capacity of 1,000 metric tons of CO₂/year with the flue-gas/process exhaust intended for the large-scale pilot or synthetic exhaust conditions (similar CO₂ and O₂ concentrations as the flue gas)
  • TA-2b: Large-scale pilot for applicants that have commissioned and started operation of a small scale pilot with realistic (or actual) flue gas and who have some operational data at the time of the full application submission. Applicants that are selected under TA-2b will enter an optional Phase 0 (small-scale pilot testing and data acquisition) of the Office of Clean Energy Demonstrations (OCED) Large-Scale Pilot Projects Program.

Topic Area 3 (TA-3): Networked Demonstration Commercialization

• Goal: TA-3 will support activities that drive maturation of the CCUS market where key infrastructure is already developing.
• TA-3 will provide the framework and increase emitter confidence through funding a comprehensive integrated FEED study at commercial scale and through the planning and development of localized carbon management networks.
• Preferred applications will have:
  • Carbon capture technologies that have attained TRL 7 for the proposed applications
  • A storage or utilization scale of at least 50 million metric tons of CO₂ within a 30-year period and at least 100,000 metric tons per year for the first five years
  • Two or more CO₂ emitters
  • Proof of detailed site characterization of the storage site in preparation for Class VI, Class II or Outer Continental Shelf (OCS) "Authorization to Construct" permit
  • Preliminary title research for the pipeline network

Key Dates

• Concept Papers Due: March 1, 2025, 5:00 p.m. ET
• Full Applications Due: July 1, 2025, 5:00 p.m. ET
• Anticipated Selection Date: 1, 2025, 5:00 p.m. ET

Holland & Knight Insights

Although there is speculation that DOE BIL funding such as this may not move forward under the incoming Trump Administration, the Holland & Knight team believes these programs will be perceived as bipartisan and are very likely to progress through the transition from the Biden to the Trump Administration. Holland & Knight's bipartisan, bicameral Public Policy & Regulation Group is a seasoned and fully integrated clean energy policy and legal team that is focused on engaging with the DOE, Congress and the executive branch to help clients realize their goals. To date, the team has helped clients secure and negotiate over $20 billion of innovative energy funding commitments from the DOE.

For more information on how our attorneys and advisors can assist with future DOE funding opportunities, help protect existing DOE investments or advocate for future legislation related to clean energy funding and finance, please reach out to the authors.