The world’s first commercial “direct air capture” plant opened in Iceland in 2021, with the capacity to remove around 4,000 tons of CO2 from the atmosphere each year and turn it into stone deep underground. Four years later, a new DAC plant planned in Louisiana, called Project Cypress, is designed to be 250 times larger—capturing 1 million tons of CO2 a year. But supporters are now scrambling to save the project, and up to $550 million in Department of Energy funding on which its future relies.
Under the Biden administration, the DOE planned to create four large new American DAC hubs, with two selected so far. In Louisiana, the project was designed to scale up two different technologies: one from Climeworks, the company behind the first plant in Iceland, and the other from Heirloom, a Silicon Valley startup that operates a plant in California’s Central Valley. Another DAC hub, in Texas, secured up to $500 million in funding from the agency. The government sent the first tranche of $50 million to both last year. Now there’s a chance that neither project will happen.
Last month, a leaked DOE memo suggested that the planned DAC hubs in Louisiana and Texas would lose their funding. If that happens, it will be a major challenge for either project to survive. “The whole point of the [DOE funding] is to step in when it’s too risky for the private sector to do so,” says Jessie Stolark, executive director of the Carbon Capture Coalition, a nonpartisan group of companies, unions, and environmental organizations that advocates for so-called carbon management tech. “You’ve got to wonder who’s going to take that risk on.”
Stolark sees a very real risk that the U.S. is ceding its leadership in the energy space. She says that it’s a story that’s been played out so many times in tech advancement: “The U.S. spends the money on the research and development for a technology, and then we don’t end up manufacturing or deploying the technology. It’s deployed elsewhere.”
Experts say DAC technology could be a meaningful part of the fight against climate change, though it’s still at an early stage of development. It will only ever supplement the main solution: radically curtailing greenhouse emissions across every sector of the economy, from transportation to manufacturing to housing. But the science suggests that to avoid the worst impacts of climate change, we must also remove at least some of the billions of tons of CO2 that we’ve pumped into the atmosphere since the start of the Industrial Revolution.
Congress has recognized the potential for DAC technology, and earmarked $3.5 billion in 2021’s Bipartisan Infrastructure Law to fund the DOE’s hubs program, which is administered by the department’s Office of Clean Energy Demonstrations. The new office launched in order to run the program and support other early-stage climate tech in the private sector.
Yet on his first day in office, Trump halted the payout of funds granted under both the Bipartisan Infrastructure Law and the Inflation Reduction Act. (He later clarified that the 90-day pause applied only to projects that are part of what the president derisively calls the “Green New Scam.”) He also tasked agencies with reviewing federal grants to assess whether they were “consistent” with his administration’s policy priorities—even though the government already had signed legally binding contracts to disburse the funds.
Compounding the issue, these policy U-turns have put other sources of money at risk. Corporations that had planned to buy carbon removal credits from the DAC plants to help meet their own climate goals, including Microsoft, Amazon, and AT&T, now don’t know when or even if those credits will become available. Investors have to worry that a make-or-break chunk of funding will disappear. Banks financing the projects could get cold feet.
“The uncertainty itself is damaging,” says Noah Deich, cofounder of the nonprofit Carbon180, who served as deputy assistant secretary for carbon management at the Department of Energy under Biden. “Everyone just needs clarity as quickly as possible.”
Climeworks and Heirloom both declined to comment for this story. Batelle, which is overseeing the implementation of the project, didn’t respond to a request for an interview.
It’s not yet a foregone conclusion that the projects are dead. After the memo leaked, a coalition of Louisiana business associations sent a letter to their D.C. representatives urging support for policies that boost carbon management. Signees included groups not known for their support of environmentalism or progressive ideals, such as the Louisiana Oil and Gas Association and the Louisiana Chemical Association. (Such support has made DAC tech controversial in some climate circles, since some industries appear to view DAC credits as an excuse to keep polluting. But help from the oil sector could also be the technology’s fastest means of scaling up.)
Louisiana Economic Development Secretary Susan Bourgeois sent another letter to Congress specifically advocating for Project Cypress. “Beyond the direct economic benefits—thousands of jobs and billions of dollars added to the state’s GDP—the project will have immense downstream impacts,” she wrote. “Investing in DAC will generate demand for American-made steel, concrete, and advanced equipment, revitalizing U.S. manufacturing and ensuring that innovation and jobs remain here at home.”
The project is estimated to bring around 2,300 jobs and a total investment of up to $1.7 billion to Louisiana. A report from the Rhodium Group estimates that the DAC industry as a whole has the potential to employ 55,000 people in the state, creating jobs that often appeal to people transitioning out of oil and gas. (In Texas, the planned DAC hub would bring 2,000 jobs, and the industry could attract more than 200,000 jobs.)
“What we’re seeing is that all of these projects are in really conservative districts,” says Deich. “These are the exact types of industrial and manufacturing jobs that so many of these communities have been asking for and are being delivered.” At the same time, “We’ve already seen this administration say very clearly that they don’t think climate change is a problem. And if you don’t think climate change is a problem, efforts to clean up carbon pollution from the atmosphere are not useful. That’s what’s so concerning to me.”
Following lobbying efforts, a revised version of the memo leaked again. Project Cypress was no longer marked as “terminate,” sources say, but the list noted that DOE wanted more time to evaluate the project. (Funding for the Texas project was still slated for termination.) A final decision might come in the next couple of weeks, when Trump’s 90-day pause on funding disbursements expires. But even if the money survives, the projects will still face challenges—including the fact that swaths of DOE staff have lost their jobs or accepted buyout offers, and it’s not clear who will be left at the agency to do the work.
Meanwhile, some DAC projects that don’t rely on massive federal grants are still moving forward, including a different large facility in Texas that’s slated to open later this year and will capture half a million tons annually. But it’s critical to launch more large projects, says Deich. The industry is aiming for a cost of $100 per ton of CO2 captured. “Everyone knows that you won’t get to that price point until you start building it at scale,” he says. “That creates the type of deployment-led innovations that you’ve seen from solar and wind—places where breakthroughs happened in the lab, initially, but then 90% of the cost reduction happened because the people who manufactured stuff figured out how to do it better.”
If large projects are delayed, that means it will take longer to get down the cost curve—and could make it harder to get more investments from the policy side in the future. Deich worries now that if the new hubs aren’t built now, people will think the projects didn’t move forward because the tech doesn’t work. That’s not the case. “It’s the political decisions that [could cause] the projects to fail at this point,” he says. “Not something inherent to the projects.”