Promoting Early Markets for Carbon Dioxide Removal Through Federal Procurement

The scientific community broadly agrees that carbon management technologies, including carbon dioxide removal (CDR), need to significantly scale in the coming decades to reach net zero carbon emissions by midcentury. However, absent a program to cap or price these emissions, CDR projects will need tailored policy support to produce reliable revenue streams to fund and operate at scale. The federal government is the world’s largest purchaser of goods and services, and leveraging this purchasing power can help develop early markets and provide demand pull for CDR.

In 2021, the Bipartisan Policy Center’s DAC Advisory Council released a series of federal policy recommendations to position the United States as a world leader in direct air capture (DAC) technology deployment. Many of the council’s recommendations passed as part of the Energy Act of 2020 and the bipartisan Infrastructure Investment and Jobs Act (IIJA). The IIJA included over $18.9 billion over five years for carbon management, including $3.5 billion to deploy four regional DAC hubs that will demonstrate and scale DAC technologies in the coming decade. The Department of Energy is actively engaging with stakeholders on effective implementation of these hubs, and the IIJA funding will help establish the requisite infrastructure and resources these hubs need.

At present, the operational costs for these hubs are likely to be covered by voluntary environmental, social, and governance (ESG) related investments from the private sector. A few early adopters like Stripe and Alphabet have stepped up with advanced market commitments that prioritize the long-term carbon storage that DAC provides, despite costing more than nature based carbon removal. Without additional policy support, increased investments in the long-term operation of DAC facilities at scale is unclear. The moment is right for the federal government to send a strong market signal towards high quality carbon removal projects to leverage even further private sector investment in this still nascent technology.

Policymakers have the opportunity to create a market for CDR with two bills currently before Congress: the Federal Carbon Dioxide Removal Leadership Act in the House and Senate and the Carbon Removal and Emissions Storage Technologies (CREST) Act in the Senate.