DOE Advances Carbon Dioxide Removal Procurement with Phase 1 Awards

The development of a robust carbon dioxide removal (CDR) market is a crucial step toward meeting our nation’s climate goals. The Intergovernmental Panel on Climate Change has deemed CDR necessary to limit global warming to 1.5°C or less by 2100.

On May 28, 2024, the Department of Energy’s Office of Fossil Energy and Carbon Management announced Phase 1 awards for its pilot CDR procurement program directed by Congress in the FY23 Omnibus appropriations bill using funding from the Bipartisan Infrastructure Law. Through federal purchases of CDR, the program aims to provide projects with a new revenue source and catalyze the CDR market as a whole. The 24 semifinalists receive $50,000 for Phase 1 and are eligible to compete for more support in Phase 2 and 3. The chosen projects span four technology pathways:

1. direct air capture (DAC) with storage,
2. biomass (BiCRS) technologies,
3. enhanced geological weathering and enhanced mineralization technologies, and
4. planned and managed carbon sinks.

The program incorporates a number of considerations raised by a private workshop convened by the Bipartisan Policy Center in 2023, summarized in our previous blog Exploring Pathways for Government CDR Purchases.

As seen in Figure 1, semifinalists are located across the U.S., with proposed delivery volumes (measured in CDR credits) ranging from 3,000 to 30,252 (each CDR credit represents one net metric ton of CO₂ captured and stored).

Figure 1. Semifinalists’ Locations

Figure 2 depicts the total number of projects chosen from each of the four CDR pathways, with DAC securing the most awards.

Figure 2. Number of Semifinalists Chosen by type of CDR 

Figure 3 shows the size of the projects chosen in terms of the amount of CDR credits they will generate over the prize period sorted by type of CDR. This chart highlights that the BiCRS projects are expected to produce more CDR credits than all other types of projects combined over the prize period.

Figure 3. Semifinalist Project Size by CDR Type

Next Steps

The 24 semifinalists can move forward to Phase 2. Teams will be required to further develop their CDR offtake agreement plans and submit a binding offer to DOE for the purchase of CDR, including a measurement, reporting and verification (MRV) plan. Winners of that round receive $375k and move on to Phase 3, in which teams will deliver verified CDR to DOE under agreed criteria and contract terms. CDR delivery will unlock a cash prize of up to $3 million per winner.

The successful conclusion of CDR Purchase Pilot Program is an important step forward in the creation of a domestic CDR market and is likely to catalyze new private investment in the carbon removal sector.

Figure 4. CDR Purchase Pilot Program Timeline