Grant Faber suspected his short tenure as the program manager for the Department of Energy’s direct air capture hubs initiative was up when he saw an article circulating that the department was set to terminate up to 2,000 employees — generally those who were new to their jobs. When he hadn’t received any news by the end of the day on Thursday, February 13, he told me he felt a sense of “anticipatory survivor’s guilt.” But it wouldn’t last long.
“I woke up Friday morning and I was locked out of all my systems, and I had to get my termination letter emailed to my personal email address,” Faber told me. “It more or less just said it’s in the public interest to do away with your job.”
President Trump's campaign to fire federal workers has hollowed out the DOE's nascent Carbon Dioxide Removal team, which sits within the Office of Fossil Energy and Carbon Management. When Trump first took office there were five employees on the CDR team, which helps to oversee implementation of the $3.5 billion Regional Direct Air Capture Hubs program, Faber told me. Now, he said, there’s only one left.
Trump’s layoffs targeted probationary employees, i.e. those who had been hired, promoted, demoted, or reassigned within the past one to two years, who enjoy fewer job protections than those with longer tenures. Faber had been at his job for 11 months. His former boss, Rory Jacobson, was also terminated a few weeks ago, as he’d recently been promoted to a new role as director of carbon removal at the DOE. “To my knowledge, this was not about terminating people that were doing DAC work, or climate work, or even CDR work,” Jacobson told me. “This was just a gross termination of federal employees, career federal employees across the federal government that were on probation.”
But the cumulative effect of these layoffs certainly increases the air of uncertainty around the DAC hubs program, which thus far include two large-scale projects — the South Texas DAC Hub and Louisiana’s Project Cypress — as well as 19 smaller hubs in earlier stages of feasibility and design development.
The various hubs’ commercial partners, which include universities, oil giants, and DAC startups themselves, were already mired in the limbo created by Trump’s Day One executive order, which froze funding from the Inflation Reduction Act and the Bipartisan Infrastructure Law. That order also led to an effective communications embargo, which prohibits the DOE from discussing or taking action on things such as contract negotiations or personnel decisions with its external partners. These recent terminations just add to the confusion.
“We’ve had no communications with DOE for three to four weeks now,” the lead of one DAC hub in the feasibility study stage told me. “So we’re kind of just waiting to see what they tell us to do.”
In the meantime, awardees are frustrated and unsure where to turn, Jacobson told me. “Should they reach out to their congressperson and try to get them to advocate on their behalf? Do they send a letter to the White House? What is the next step to try and make things move for their projects?” These doubts pose a big problem for startups with novel technologies trying to build out large infrastructure projects, as they generally have smaller margins, less patient investors, and thus less room for error than industrial stalwarts with proven strategies. “Especially for these first-of-a-kinds, they are working on pretty dire timelines for project finance,” Jacobson said.
The DAC hubs were already off to a slow start, according to Jacobson, who told me that the $1.2 billion from the initial funding opportunity issued at the end of 2022 took much longer to get out the door than anyone hoped for. Project Cypress didn’t see any of its initial $50 million award until March of last year, and the South Texas hub had to wait until September for the same funding. Jacobson chalked up the delays to the fact that the awardees are generally relatively early-stage startups that have yet to build significant infrastructure projects, and that the DOE is unfamiliar with negotiating such large-scale proposals.
Thankfully the DOE’s small CDR division isn’t the only government entity interfacing with the DAC hubs. The Office of Clean Energy Demonstrations is overseeing the buildout of the larger South Texas and Project Cypress hubs. And the National Energy Technology Laboratory is overseeing the implementation of the smaller DAC hubs, which are in the feasibility study and design planning stages. They’ve received a combined total of $121 million so far, though some are still negotiating the size of their awards.
OCED and NETL have also been impacted by the government-wide staffing cuts, however, potentially affecting their ability to pick up the slack from the decimated CDR team, which helped to provide top-level oversight and expertise. As Jacobson told me, his job was to “make a theory of change” that united the DOE’s various carbon removal initiatives, aligning them with the administration’s overall energy strategy, whatever it was. Absent this broader vision and explicit strategic direction, coordination among the various government agencies and implementation partners could suffer.
Day-to-day organizational details also stand to falter, Faber told me. In his role, he primarily provided oversight for the 19 smaller, earlier stage DAC hubs. “A lot of times, progress can come down to literally just things like getting signatures, getting approvals, communicating things to leadership back and forth,” he said. “If you don’t have a team in place coordinating those things at headquarters, everything’s just going to be more difficult.”
All that’s to say that further hold-ups could hit the hubs hard, especially the two large projects, which could eventually receive federal funding of up to $500 million to $600 million, provided the hubs can match that with funding from other sources. “If the DOE tries to back out or withholds funding and there’s uncertainty, then yes, it could severely delay or even kill some of those projects, or just result in massive reductions in their scope,” Faber told me. Perhaps other investors, such as climate tech VCs, would be willing to step in if this were to happen, he added.
Faber noted that one proof point that could give investors and other industry leaders confidence in this tech is the forthcoming large-scale DAC facility called Stratos from developer 1PointFive, a subsidiary of Occidental Petroleum, which is designed to remove up to 500,000 metric tons of CO2 annually and set to come online later this year. While Stratos is not a part of the hubs program, Occidental is using the same technology for its South Texas hub — tech that the oil giant brought in-house when it acquired DAC startup Carbon Engineering in 2023. And Heirloom, a DAC company that’s helping to lead Project Cypress, also recently raised a huge $150 million Series B round, showing continued investor confidence in this technology.
The DAC hubs program also still has billions of dollars yet to be awarded. A few months ago, the DOE announced a new $1.8 billion funding opportunity for mid- and large-scale DAC projects. Interested parties have already submitted their required concept papers and pre-applications, with full applications due at the end of July. But the current chaos puts applicants in a tricky spot, as the new administration’s commitment to the program overall is now somewhat of a question mark.
That being said, Jacobson told me there’s no indication that either Trump or Secretary of Energy Chris Wright is necessarily opposed to DAC, or carbon dioxide removal overall. “I still don’t think that we’ve seen a clear signal that this administration is not excited about CDR,” Jacobson said. “I have not heard Secretary Wright say — or other leadership at DOE say — that we are not still very enthusiastic about DAC hubs.”
DAC buildout also has an array of bipartisan benefits, both Jacobson and Faber noted, and hasn’t been a target of right-wing ire in the way that electric vehicles and offshore wind have. On the contrary, Republicans (and oil and gas companies) often argue for it as a way to continue fossil fuel production in a world that’s moving towards lower-emissions sources of energy. Not to mention the fact that these DAC facilities are mainly being built in red states, thus adding jobs and GDP in these regions.
“I thought these kinds of projects would get to keep going,” the DAC hub leader, whose project has had elements halted, told me. “They’re creating jobs, they’re investing in technology. I think they could be well aligned with unleashing America’s energy dominance.”
But these days, few Biden-era initiatives are safe. As Faber told me, if the Trump administration chooses to take a hard line stance against “any and all government funding and regulation, and anything that even has a tinge of being associated with climate,” then DAC is going to have a target on its back, even if some congressional Republicans have previously expressed support for it.
The budget reconciliation process will give us more insight into the specific IRA and BIL funding provisions Trump and other Republicans are looking to axe. That same process will also determine the fate of tax credits such as 45Q, which encourages carbon capture and sequestration. In the near term, Democrats are pushing to get language into the government funding bill (which is separate from the reconciliation bill and must pass in some form by mid-March) that would require Trump to deliver congressionally appropriated money. If that happens, funds would start flowing to the DAC hubs — but don’t bet on it. Republicans are adamant that they won’t stand for such limitations on presidential authority.
DAC grantees, government employees, and implementation partners alike will have to do the wait-and-see thing for a while longer. “I do believe that when we get out of this fog of the first 100 days of the new administration, when they’re just trying to move fast and break things and get big headlines and try to make it seem like they’re keeping campaign promises, maybe things will slow down,” Faber told me. “Maybe they’ll get distracted or just move on to a new issue other than dismantling the federal government.”
While spot prices are coming back down, they're still far above recent years. EIA
