Department of Energy Announces over $1.2 Billion in Funding for Regional Direct Air Capture Hubs

Dec 15, 2022

Reading Time : 3 min

The U.S. Department of Energy (DOE) Office of Fossil Energy and Carbon Management (FECM) issued a Funding Opportunity Announcement (FOA) on December 13, 2022, explaining how DOE will allocate more than $1.2 billion of federal funding to support the development of four Regional Direct Air Capture Hubs (“DAC Hubs”). The Infrastructure Investment and Jobs Act of 2021 (IIJA) requires DOE launch a program to accelerate DAC Hub development. This FOA is the first of two anticipated announcements explaining how DOE will allocate $3.5 billion appropriated by the IIJA through fiscal year 2026 for this purpose.

The IIJA defines a “regional direct air capture hub” to be a network of direct air capture projects, potential carbon dioxide utilization off-takers, connective carbon dioxide transport infrastructure, subsurface resources and sequestration infrastructure located within a region. Each of the regional DAC Hub must (1) facilitate the deployment of direct air capture projects; (2) have the capacity to capture and sequester, utilize, or sequester and utilize at least one million metric tons of carbon dioxide from the atmosphere annually from a single unit or multiple interconnected units; (3) demonstrate the capture, processing, delivery and sequestration of end-use of captured carbon; and (4) have the capacity to be developed into a regional or interregional carbon network to facilitate sequestration or carbon utilization.

The DOE anticipates making approximately 22 awards available under this initial FOA, ranging between $3 and $500 million each. DOE has categorized and characterized how it plans to allocate the awards based upon five distinct phases of development and implementation: Phase 0: Feasibility; Phase 1: Detailed Plan and Front-End Engineering Design (FEED) Studies; Phase 2: Project Development, Permitting, and Financing; Phase 3: Procurement, Construction and Integration; and Phase 4: Ramp-Up and Sustained Operations. Funding under the initial FOA is limited to projects that respond to the first three phases, under the assumption that funding for the later phases is too premature given the complexities related to and relative immaturity of the DAC Hub concept. On that assumption, DOE anticipates that up to 12 awards will provide funding for feasibility studies for Regional DAC Hub concepts, up to eight awards will concern FEED studies for Regional DAC Hubs, and two awards will be made for up to two Regional DAC Hubs to complete Phases 2 through 4, including Community Benefits Plans that consider Environmental Justice and Justice40 principals and National Environmental Policy Act work as the project progresses towards construction and initial operation. The next tranche of funding will be directed to the later stages of development. Award recipients also will be subject to cost sharing obligations, the IIJA’s Build America, Buy America requirements and Davis-Bacon Wage Rate requirements.

The FOA is designed to enable a range of domestic entities to apply for DAC Hubs, including state/local governments, academic institutions, non-profit organizations and private corporations. It is also designed to encourage partnerships between DAC developers focused on a diverse set of technologies, and to promote innovative DAC Hub ownership structures, such as a utility model, or community or publicly owned organizations and/or models tailored to support underserved communities, to participate alongside more traditional industry models.

Any entity interested in receiving federal funding under this FOA must submit a letter of intent to the DOE by January 24, 2023, at 5:00 p.m. ET. Full applications will be due on March 13, 2023, at 5:00 p.m. ET. The FOA coincides with a suite of announcements made by DOE on December 13 on behalf of FECM. These include the FECM’s Direct Air Capture Commercial and Pre-Commercial Prize totaling $115 million to promote diverse approaches to direct air capture; Carbon Utilization Procurement Grants to be managed by FECM to provide grants totaling up to $100 million to states, local governments and public utilities to support the commercialization of technologies that reduce carbon emissions; and the Bipartisan Infrastructure Law Technology Commercialization Fund (TCF) managed in partnership with FECM and DOE’s Office of Technology Transitions, which may award $15 million to projects led by DOE National Laboratories, plants and sites, and supported by diverse industry partnerships spanning the emerging carbon dioxide removal sector.

Share This Insight

Previous Entries

Speaking Sustainability

June 30, 2025

The European Parliament and Council reached a provisional agreement (i.e., a post-consultation, non-binding political deal in relation to the final text of a legislative proposal) to streamline the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) on June 18, 2025. This is a key instrument to prevent carbon leakage and align trade policy with the EU’s climate goals. The changes are part of the EU’s broader sustainability legislative simplification package announced earlier this year. This proposal is intended to ease compliance burdens while maintaining the environmental integrity of the CBAM framework.

...

Read More

Speaking Sustainability

June 27, 2025

Key Topics in Akin’s June 2025 Speaking Sustainability - Legal & Regulatory Update

...

Read More

Speaking Sustainability

February 19, 2025

Wind energy projects along the coasts are facing uncertainty due to President Trump’s Presidential Memorandum1 issued on January 20, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects.” This Memorandum introduces substantial policy changes that impact both onshore and offshore wind development.

...

Read More

Speaking Sustainability

February 14, 2025

Key topics in Akin’s February 2025 Speaking Sustainability - Legal & Regulatory Update include:

...

Read More

Speaking Sustainability

January 24, 2025

Beginning on Monday, there have been a flurry of executive orders from the Trump administration reversing Biden-era energy policies, emphasizing oil and gas production, lifting the liquified natural gas (LNG) export permitting pause and withdrawing from all accords and commitments under the United Nations Framework Convention on Climate Change (UNFCCC) including the Paris climate agreement. The orders also target electric vehicles (EVs), wind energy, international climate aid and the use of the social cost of carbon in agency decision making. For close tracking of these orders and more to come, visit the Akin Trump Executive Order tracker. Concurrently, President Trump’s nominees for the Department of the Interior (DOI), Department of Energy (DOE) and Environmental Protection Agency (EPA) have each passed their initial rounds of committee confirmation votes, and now await votes before the Senate floor.

...

Read More

Speaking Sustainability

January 10, 2025

In the final days of his term, President Joe Biden has taken significant steps to solidify his administration’s climate legacy. The administration finalized rules for various clean energy tax credits established under the Inflation Reduction Act. However, these rules, intended to stimulate clean energy advancements through 2032, face opposition from Congressional Republicans, who are considering scaling back or repealing the credits through budget reconciliation.

...

Read More

Speaking Sustainability

December 19, 2024

The twilight hours of the Biden administration and the 118th Congress have been marked by intense legislative and regulatory activity, underscored by President-elect Trump’s derailment of last-minute congressional budget talks, and stalled progress on energy permitting reforms.

...

Read More

Speaking Sustainability

December 11, 2024

The Biden administration’s environmental policies and the future of infrastructure projects are facing pivotal legal challenges and political shifts. The U.S. Court of Appeals for the D.C. Circuit questioned the viability of the Environmental Protection Agency’s (EPA) 2024 power plant emissions rule, particularly its reliance on carbon capture technology, while the 6th Circuit overturned the EPA’s rejection of Kentucky’s smog plan, which comes only three days after the EPA issued its defense of its “good neighbor” smog control plan responding to the Supreme Court’s decision to halt its implementation in June. Meanwhile, the Supreme Court’s handling of the first National Environmental Policy Act (NEPA) case in some time, Seven County Infrastructure Coalition v. Eagle County, could substantially alter the scope of environmental reviews, with potential immediate implications for the oil & gas industry. These judicial reviews may be influenced by a potential change in administration and Congress, as Trump-era officials, including Vivek Ramaswamy, advocate for scaling back NEPA regulations to expedite infrastructure projects. Additionally, the Department of Energy’s recent clarity on liquified natural gas (LNG) export authorizations underscores the broader tension between expanding fossil fuel infrastructure and adhering to environmental regulations amidst a polarized political and legal landscape.

...

Read More

© 2025 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.