The U.S. Government Will Pay to Remove Carbon From Atmosphere
The key climate technology lands a big customer.
The federal government is preparing to pay companies to remove carbon dioxide directly from the atmosphere, launching a first-of-its-kind program that could transform the market for the nascent climate technology, according to people familiar with the matter.
The program would mark a global first: Never before has any government paid to remove climate pollution from the atmosphere.
The effort will be managed by the Department of Energy and will initially have a budget in the tens of millions, the people said. It will use one of the government’s most potent tools — its power as a customer — to accelerate a technology that experts say is essential to fighting climate change.
A spokesperson for the Department of Energy declined to comment.
The government has previously used its power as a purchaser to speed up the development of semiconductors, titanium, and — most recently — COVID-19 vaccines. As a piece of industrial strategy, the new program will give the government a lever to shape the market and set standards for the emerging climate technology.
But it could also help establish a precedent that carbon dioxide is a waste product that — like other forms of waste — must sometimes be managed by the public. By a rough estimate, the carbon-removal industry must grow thousands of times larger by the end of this decade in order for the world to hit its climate goals.
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The program, which is expected to be announced soon, was quietly approved by Congress last year. The 2023 appropriations law told the Energy Department to “establish a competitive purchasing pilot program for the purchase of carbon dioxide removed from the atmosphere or upper hydrosphere.”
The department has been working on the program since then. In February, it requested public input for a plan to provide “demand-side support for clean energy technologies,” including for “carbon dioxide removal.”
The Bipartisan Policy Center, a centrist think tank, later held a closed-door meeting with companies and nonprofits about how to best design such a program.
Carbon removal is a rare bright spot for bipartisanship in climate policy. A handful of Republicans and Democrats — including Senators Susan Collins of Maine and Bill Cassidy of Louisiana, as well as Senators Chris Coons of Delaware and Maria Cantell of Washington — have co-sponsored bills that would significantly expand the government’s support for removing carbon from the atmosphere.
The government has already unveiled powerful programs meant to encourage the industry’s growth. The bipartisan infrastructure law contained $3.5 billion to fund a set of large-scale, industrial facilities that will specialize in scrubbing carbon out of the ambient air. And the Inflation Reduction Act contained a tax credit that compensates companies for every ton of carbon that they inject underground rather than release into the atmosphere.
The new procurement program would broaden the government’s approach. Unlike pre-existing policies, the new program could support any kind of technology that removes carbon from the air — not just an industrial direct-air-capture facility or a technology that injects carbon underground.
Some carbon-removal companies, for instance, seek to “remineralize” carbon, turning it into rocks on the Earth’s surface. That technique is not covered by existing subsidies or grants, but it may be covered by the new procurement program.
The new program would also change how the government interacts with the nascent market. While the government has previously granted money to carbon-removal companies, funded R&D, or subsidized their activities, it has never pledged to buy their services directly.
Even with the new program, carbon removal will remain one of the trickiest problems in the fight against climate change.
According to the Intergovernmental Panel on Climate Change, humanity needs carbon removal to become much cheaper and more widely deployed if we are to have any hope of keeping global temperatures from rising by more than 1.5 degrees Celsius.
Even if humanity reaches that mark, it will still need to bring annual carbon pollution — and the unabated burning of fossil fuels — down to near zero. But carbon removal will also allow humanity to carry on a few so-called hard-to-decarbonize activities, such as chemical production or long-distance air travel, that can’t be done right now without fossil fuels.
Even so, the math is daunting. Last year, the world removed several thousand tons of carbon at a cost of about $200 to $2,000 per ton, by one estimate.
But by 2050, the world must remove perhaps 10 billion tons of carbon dioxide a year if it hopes to maintain its climate goals. Even if the cost of carbon removal were to fall significantly — to, say, just over $100 a ton — the bill would exceed $1 trillion. That is roughly 1 percent of global GDP in 2023.
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