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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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A conversation with Mike Hall of Anza.
This week’s conversation is with Mike Hall, CEO of the solar and battery storage data company Anza. I rang him because, in my book, the more insights into the ways renewables companies are responding to the war on the Inflation Reduction Act, the better.
The following chat was lightly edited for clarity. Let’s jump in!
How much do we know about developers’ reactions to the anti-IRA bill that was passed out of the House last week?
So it’s only been a few days. What I can tell you is there’s a lot of surprise about what came out of the House. Industries mobilized in trying to improve the bill from here and I think a lot of the industry is hopeful because, for many reasons, the bill doesn’t seem to make sense for the country. Not just the renewable energy industry. There’s hope that the voices in Congress — House members and senators — who already understand the impact of this on the economy will in the coming weeks understand how bad this is.
I spoke to a tax attorney last week that her clients had been preparing for a worst case scenario like this and preparing contingency plans of some kind. Have you seen anything so far to indicate people have been preparing for a worst case scenario?
Yeah. There’s a subset of the market that has prepared and already executed plans.
In Q4 [of 2024] and Q1 [of this year] with a number of companies to procure material from projects in order to safe harbor those projects. What that means is, typically if you commence construction by a certain date, the date on which you commence construction is the date you lock in tax credit eligibility, and we worked with companies to help them meet that criteria. It hedged them on a number of fronts. I don’t think most of them thought we’d get what came out of the House but there were a lot of concerns about stepdowns for the credit.
After Trump was elected, there were also companies who wanted to hedge against tariffs so they bought equipment ahead of that, too. We were helping companies do deals the night before Liberation Day. There was a lot of activity.
We saw less after April 2nd because the trade landscape has been changing so quickly that it’s been hard for people to act but now we’re seeing people act again to try and hit that commencement milestone.
It’s not lost on me that there’s an irony here – the attempts to erode these credits might lead to a rush of projects moving faster, actually. Is that your sense?
There’s a slug of projects that would get accelerated and in fact just having this bill come out of the House is already going to accelerate a number of projects. But there’s limits to what you can do there. The bill also has a placed-in-service criteria and really problematic language with regard to the “foreign entity of concern” provisions.
Are you seeing any increase in opposition against solar projects? And is that the biggest hurdle you see to meeting that “placed-in-service” requirement?
What I have here is qualitative, not quantitative, but I was in the development business for 20 years, and what I have seen qualitatively is that it is increasingly harder to develop projects. Local opposition is one of the headwinds. Interconnection is another really big one and that’s the biggest concern I have with regards to the “placed-in-service” requirement. Most of these large projects, even if you overcome the NIMBY issues, and you get your permitting, and you do everything else you need to do, you get your permits and construction… In the end if you’re talking about projects at scale, there is a requirement that utilities do work. And there’s no requirement that utilities do that work on time [to meet that deadline]. This is a risk they need to manage.
And more of the week’s top news in renewable energy conflicts.
1. Columbia County, New York – A Hecate Energy solar project in upstate New York blessed by Governor Kathy Hochul is now getting local blowback.
2. Sussex County, Delaware – The battle between a Bethany Beach landowner and a major offshore wind project came to a head earlier this week after Delaware regulators decided to comply with a massive government records request.
3. Fayette County, Pennsylvania – A Bollinger Solar project in rural Pennsylvania that was approved last year now faces fresh local opposition.
4. Cleveland County, North Carolina – Brookcliff Solar has settled with a county that was legally challenging the developer over the validity of its permits, reaching what by all appearances is an amicable resolution.
5. Adams County, Illinois – The solar project in Quincy, Illinois, we told you about last week has been rejected by the city’s planning commission.
6. Pierce County, Wisconsin – AES’ Isabelle Creek solar project is facing new issues as the developer seeks to actually talk more to residents on the ground.
7. Austin County, Texas – We have a couple of fresh battery storage wars to report this week, including a danger alert in this rural Texas county west of Houston.
8. Esmeralda County, Nevada – The Trump administration this week approved the final proposed plan for NV Energy’s Greenlink North, a massive transmission line that will help the state expand its renewable energy capacity.
9. Merced County, California – The Moss Landing battery fire is having aftershocks in Merced County as residents seek to undo progress made on Longroad’s Zeta battery project south of Los Banos.
Anti-solar activists in agricultural areas get a powerful new ally.
The Trump administration is joining the war against solar projects on farmland, offering anti-solar activists on the ground a powerful ally against developers across the country.
In a report released last week, President Trump’s Agriculture Department took aim at solar and stated competition with “solar development on productive farmland” was creating a “considerable barrier” for farmers trying to acquire land. The USDA also stated it would disincentivize “the use of federal funding” for solar “through prioritization points and regulatory action,” which a spokesperson – Emily Cannon – later clarified in an email to me this week will include reconfiguring the agency’s Rural Energy for America loan and grant program. Cannon declined to give a time-table for the new regulation, stating that the agency “will have more information when the updates are ready to be published.”
“Farmland should be for agricultural production, not solar production,” Cannon wrote – a statement also made in the USDA report.
REAP is a program created in 2008 that exists to help fund renewable energy and sustainability projects at the level of individual farms and has been seen as a potential tool for not only building more solar but also more trust in agriculturally-focused communities. It’s without question that retooling REAP to actively disincentivize awardees from building solar on farmland could have a chilling effect, at least amongst those who receive money from the program or wish to in the future. This comes after Trump officials temporarily froze money promised to farmers, too.
As we’ve previously written in The Fight, agricultural interests can at times present as much a threat to the future of solar energy as any oil-funded dark money group, if not more so. Conflicts over solar production on farmland make up a large portion of the total projects I cover in The Fight every week, and it is one of the most frequently cited reasons for opposition against individual renewables projects. (Agricultural workforces are one of the most important signals for renewable energy opposition in Heatmap Pro’s modeling data as well.) I wrote shortly after Trump’s inauguration that I wondered when – not if – he would adopt this position.
It’s unclear what exactly led USDA to dive headlong into the “No Solar on Farmland” campaign, aside from its growing popularity in conservative political circles, but there is reason to believe farming interests may have played a role. USDA has stated the report was the product of discussions with farming groups and an industry roundtable. In addition, per lobbying disclosures, at least one agricultural group – the Pennsylvania Farm Bureau – advocated earlier this year for “congressional action and/or executive orders” to “balance renewable and conventional sources of energy” through “limit[ing] solar on productive farmland.” (The Pennsylvania Farm Bureau denied this in an email to me earlier this week.)
There’s also reason to believe some key stakeholders were caught off-guard or weren’t looped in on the matter.
American Farmland Trust has been trying to cultivate common ground between farmers, solar companies, and various agencies at all levels of government over the future of development. But when asked about this report, the nonprofit told me it couldn’t speak on the matter because it was still trying to suss out what was going on.
“AFT is meeting with the Trump administration to learn more about what they are planning in terms of policy and programs to implement this concept,” AFT media relations associate Michael Shulman told me.