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The Department of Energy is giving the green light to Project Cypress, a cluster of facilities in southwest Louisiana that will filter carbon dioxide directly from the air and store it underground. The agency announced Wednesday that it will award the project $50 million for the next phase of its development, which will be matched by $51 million in private investment.
Before receiving any money, the Project Cypress team had to reach an agreement with the DOE regarding how they would engage with community and labor stakeholders. The result, also released Wednesday, was a series of commitments — for example, to assemble a community advisory board, to partner with local workforce development organizations, and to create a public website with project information.
The developers have yet to provide a list of more concrete, measurable benefits the project will bring to the community. This was more like a plan to make a plan that will have robust community input. That the project sits near Lake Charles, home to some of the most contested energy projects in the country, will not make the next steps easy, however.
The funding is part of a $3.5 billion program authorized by Congress in the Bipartisan Infrastructure Law to create four such “direct air capture hubs” around the country in an effort to help commercialize the nascent technology. This is the first award the DOE has handed out after selecting Project Cypress last August as one of two hubs it would consider supporting. A second hub under development by Occidental Petroleum in South Texas is still in negotiations with the agency and has yet to receive funding.
Once it’s fully operational, Project Cypress is designed to capture 1 million tons of carbon from the air per year, employing two different technological approaches to do so.
The first, developed by the Swiss startup Climeworks, uses fans to draw air into metal boxes containing a material called a sorbent that attracts carbon dioxide molecules. Then it heats the sorbent, which releases the CO2 so that it can be stored.
The second approach, pioneered by a California-based company called Heirloom, involves crushing and cooking limestone so that it becomes calcium oxide, a white powder that’s thirsty for CO2. Heirloom lays the powder out on trays, where it binds with carbon dioxide in the air. Then it bakes the powder in an electric kiln to remove the CO2.
Both companies say they will use renewable energy to power their respective processes. To lock the carbon away underground, they are partnering with a company called Gulf Coast Sequestration which has applied for permits to drill two CO2 storage wells on a vast, privately-owned cattle and horse ranch in West Calcasieu Parish. After the carbon is captured, it will be liquified and delivered by pipeline to a well, where it will be injected into porous sandstone about 10,000 feet below the Earth’s surface.
With this award, the project will enter the second of four implementation phases, during which the companies will finalize the project’s design, engage with area residents and stakeholders to complete a community benefits plan, and start on the permitting process.
Phase two will not be quick — it’s expected to last two to three years. Then the companies will begin negotiating with the DOE for funding for phases three — construction — and four — the ramp-up to full-scale operation. The DOE has structured the DAC Hubs program with off-ramps at the start of each phase, allowing the agency to deny additional funding to a project if it finds that it is not meeting previously agreed-upon objectives. But if all goes well, Project Cypress is eligible for up to $600 million.
The Carbon Removal Alliance, a group that lobbies for policies to support what it calls “high quality carbon removal,” sees this award as a “fresh start” for the Department of Energy in that it shows the agency moving beyond its traditional role of funding research and development to commercializing technologies.
“With official funding beginning to flow into states like Louisiana and backed by robust community benefits plans to ensure the highest standards, we’re about to see how technologies like direct air capture can provide positive benefits to our economies and environment,” said Giana Amador, the executive director of the Carbon Removal Alliance.
Members of the community, however, are skeptical that the project will benefit them.
The industrial history of Calcasieu Parish is both an asset and a curse for Project Cypress. The area is home to a high concentration of refineries, petrochemical plants, and liquified natural gas terminals. The developers chose the location because it had a local workforce with relevant skills and the right geology to trap carbon underground, but the residents’ trust will be hard-won after decades of living in one of the most polluted corridors in the country, where news of toxic spills and leaks is common. Many residents have spent the last few years furiously fighting the buildout of several new LNG plants that are expected to increase pollution even more.
One of those activists is James Hiatt, a former refinery worker based in Sulphur, Louisiana. About a year ago, Hiatt founded a group called For A Better Bayou because he wanted to build a grassroots movement to reimagine the future of Louisiana — to be for something, not just against heavy industry.
“I want people to really imagine and embrace an alternative future for ourselves,” he told me. But to him, direct air capture is not it. “I wish I was so sold on it, like this is the way forward and I could get behind it and we could be like oh yeah, let's do this,” he told me. “But it just does not add up for me.”
When the project developers and the DOE held a meeting for stakeholders last November, Hiatt said, even attendees who worked in the oil and gas and petrochemical industries expressed doubts about the plan.
Hiatt shared a few videos from the meeting with me. One speaker questioned whether the jobs created would truly go to people from the area. This is not the first time a company has come in promising jobs and economic growth, only to hire workers from Alabama or Texas. Another speaker called the idea of a community benefits plan a way to “distract the community” from the risks of the project, which the companies have yet to define. (A preliminary list published Wednesday included things like increased traffic and noise during construction, risk of leakage during the transport or storage of the CO2, and energy and water use.) Others implored the companies not to seek property tax breaks, which divert revenue away from schools and social services.
When Project Cypress was first announced, the developers said it would create “approximately 2,300 quality jobs and generate a billion-dollar economic stimulus in the region, with increased opportunities for local contractors, suppliers, and small businesses.” The project also has a stated goal of hiring at least 10% of its workforce from the local fossil fuel and plastics industries.
But beyond that, its intentions are vague. The list of commitments published on Wednesday included lots of plans — i.e., a plan to create a “Site Labor and Workforce Development plan” which will “describe plans to provide equal access to jobs for local residents for construction and operations” — but few concrete actions or outcomes, yet.
Hiatt is especially skeptical that the carbon will stay underground and is worried about leaks. But perhaps more than that, the math of it all doesn’t make sense to him. Project Cypress might capture a million tons of CO2 from the air per year, but Louisiana alone releases more than 200 million tons annually, and is still approving new emissions-intensive facilities like those LNG plants. “Even if we scale this up, we'd have to scale it up orders of magnitude higher than will ever be possible,” he told me. “It doesn't seem like it's worth the time or the money to be doing this when we should be reducing the emissions to start with.”
There are many hurdles to scaling up direct air capture, but overcoming this cognitive dissonance is one of the trickiest. Ultimately, the goal of the project is not to offset Louisiana’s emissions. It’s to demonstrate a technology that could eventually, if we develop the right incentives to support it, clean up carbon that’s already in the atmosphere. But believing in that vision demands that people also see a world where emissions will start to decline — one that’s perhaps not yet apparent in Lake Charles.
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The automaker had a decent second quarter, but projects its best-ever year-end performance, as we wrap up a busy week in the energy economy.
This is an edition of Heatmap Daily, an evening review of the day’s news written by our executive editor. Sign up for it here.
We are now well into the quarterly earning season, and this week we got a bead on some of the energy and climate economy’s biggest stories. Here’s what stuck out to me:
Oil companies had a blow-out quarter. As my colleague Matthew Zeitlin wrote today, oil and gas companies cashed in on the global price surge triggered by the Iran war. Their refining businesses did particularly well. But their results also revealed that global oil demand continues to fall — at least for now.
Some data center bets are starting to pay off. As I wrote on Wednesday, Microsoft had a bonanza quarter, and its Azure cloud business — which allows other companies to rent its data centers — grew faster than Wall Street expected.
That matters because America’s biggest tech companies have spent the past few years transforming into industrial firms, building massive new infrastructure and driving up U.S. electricity demand — and that strategy, contrary to some expectations, seems to be working for now.
Rivian is optimistic. The most important U.S. electric vehicle maker not run by Elon Musk released their second quarter results on Thursday night. The outlook was … decent!
The company delivered almost 12,200 vehicles last quarter. This was Rivian’s best period for sales since the third quarter of last year, when every EV maker’s results were juiced because the Inflation Reduction Act’s EV leasing tax credit expired.
Crucially, this was our first look at Rivian’s sales since it started delivering its more affordable (and well-reviewed) crossover, the R2. That vehicle started going out to customers at the very end of the quarter in mid-June, so we only get a snippet of those deliveries in this number.
More heartening, I think, is Rivian’s forward guidance. It now expects to deliver 65,000 to 70,000 vehicles this year, which implies it will deliver an average of more than 21,000 over the next two quarters. That would make Q3 and Q4 of this year its best sales periods ever.
RJ Scaringe, the company’s CEO, said that R2 sales conversions were running “meaningfully higher” than the company projected. The company still lost $379 million last quarter, but that was much better than analysts had projected.
We last checked in on Rivian when they sold new stock earlier this month to fund collateral for an Energy Department loan that will let them build a second factory in Georgia. On the call yesterday, executives confirmed they expect to start drawing on that loan in early 2027, part of what it painted as a healthy cash flow picture. For all the optimism, though, investors seemingly remain skeptical: Its stock fell 8% today.
It’s 2022 all over again. A war has broken out involving (at least) one large oil-producing country, raising both prices and oil company profits.
Chevron reported Friday a quarterly profit of $12.1 billion, its highest quarterly profit ever. ExxonMobil also announced a blowout quarter on Friday. Its $14.5 billion profit was its highest since the Russian invasion of Ukraine in 2022 (when it posted an almost $20 billion profit in the third quarter). These announcements followed Shell’s Thursday earnings report, which revealed a profit of almost $10 billion, close to double its previous quarter earnings and in range of its 2022-vintage quarters.
What does this mean for decarbonization?
1. It’s refining, stupid.
The story across the oil majors was largely one of getting more profit out of its existing assets, particularly in their refining business.
Shell, for example, said that they were running their refineries at over 100% capacity and that it had shifted production to jet fuel, which had been in especially short supply following the American and Israeli attack on Iran and subsequent closure of the Strait of Hormuz.
The company said it had “significantly higher” trading profits, likely from the volatility of commodity prices due to the start and stop nature of the war. Exxon said that it had “a second-quarter record for diesel production,” and that its chemicals business saw its margins jump by around 180% as its North American facilities were able to count on a steady stream of hydrocarbon feedstocks, unlike rivals in Asia.
“The unprecedented reduction in refining capacity – with nearly 9% of global capacity offline across Russia, China, and the Middle East – limited the supply of gasoline, diesel, and other products,” Exxon said. “As a result, refining margins reached record levels in the quarter.”
Meanwhile Chevron said it was refining over one million barrels of oil per day with “more than 97 percent” utilization.
While this constrained global refining capacity is largely due to military conflict in the Middle East and Russia, refinery capacity has been basically flat in many developed economy markets for decades. In the United States, the newest large refinery was built in 1977, an indication that while the U.S. transportation and energy system is still dominated by fossil fuels, there isn’t much appetite for the billions of capital investment needed to expand capacity for refining gasoline. So, while profits can surge in the short term, it doesn’t necessarily mean blue skies for oil companies.
2. Oil demand is actually falling — for now
Chevron noted that sales of refined products had actually fallen by 4% in the United States and 13% internationally. While in the short run this is likely due to higher prices, it is consistent with falling forecasts for oil demand.
While the International Energy Agency’s “current policies scenario,” which forecasts demand based on a snapshot of existing policies, sees a slow and steady rise through 2050, its “stated policies scenario” based on the trajectory of policy and commitments around energy and climate, sees oil demand peaking at levels slightly about the status quo by around 2030. In the medium run, the IEA said that “Forecast growth of [two million barrels per day] in 2027 results in a two-year pace of expansion well below historical trends.”
BP even announced layoffs of hundreds of employees, according to an internal message seen by Reuters.
This can help explain why, despite the strong profits, investors do not seem particularly jazzed about the oil giants — ExxonMobil and Chevron shares are only up slightly since the beginning of the war in Iran.
3. The high profits are already stoking public outrage
Everyone knew oil prices had risen since the war in Iran began — they could see it at the pump. But the confirmation that the war has spurred record or near-record profits has been fresh meat for environmental groups that want a faster energy transition.
“The mugging at Mar-a-Lago just keeps getting worse. The president said he would sell out Americans to oil and gas CEOs for a billion dollars in campaign donations. Now we know he owns millions of dollars worth of their stock. Those same companies are profiting from Trump’s war of choice, which has killed and injured U.S. service members, and left consumers struggling to stay afloat,” former Washington Governor Jay Inslee said in a statement blasted out by the communications group Climate Power.
The profits also spurred advocates to redouble calls for windfall profit taxes. “It’s fair to put a windfall profits tax on inordinate windfall profits rather than cut off children’s food programs,” Rhode Island Senator Sheldon Whitehouse told the Associated Press. Whitehouse introduced a bill in March that would impose taxes on oil companies in the event of price surges.
And even President Trump, whose presidential campaign was buoyed by donations from the oil and gas industry, called for an investigation into retail gasoline prices last month.
Since 2022, fossil fuels have moved back to the center of the world economy as concerns about shortages, price spikes, and availability have helped push concerns about climate change to the margins of policymaking. However, when oil companies are making more money than ever, it means an uptick in public concern or scrutiny. In the long run, oil companies have to worry about decarbonization; in the short run, they’ll have to worry about their customers.
What’s the deal with all those “America Connects” videos?
The data center lobby is launching a big PR blitz on television and social media, racking up millions of views on evidently AI-generated content boasting economic impacts from new projects and hitting against criticism around energy and water use.
In an interview with me Wednesday, Data Center Coalition CEO Josh Levi explained how and why his organization – the largest and most prominent data center trade group – stood up an “evolving” national advertising campaign called America Connects.
Like me, up until now, you might’ve interacted with the campaign’s materials without knowing it. For weeks I’ve been getting texts from people in my life who know I write about data centers asking if I’d seen these ads on TV streaming platforms and social media sites boasting benefits from data centers, or pushing back on complaints about energy and water use. Most of the videos were quite similar, appeared to be generated using AI (with no AI labeling), and were racking up millions in views and impressions.
“Our paychecks, our hospitals, our national security – all run through data centers,” states one voiceover in a YouTube ad targeted at the Longhorn State with more than 12 million views as of today.
“In Texas, they’re doing more than keeping us connected. Data centers support high-paying jobs and pay billions in taxes. Money that can lower your bills, make schools and roads better and communities safer. And new technology means data centers consume minimal water while funding new power generation for everyone. Data centers: built in Texas. For Texas.”
These videos each are hosted on channels named for specific campaigns in individual states. In Georgia, it’s called Connected Georgia. There’s a Texas Connects, an Indiana Connects, and a Pennsylvania Connects. At least eight state campaigns are happening right now and I’m told more should be expected in the near future. Each state campaign has a near-identical website with links to their promoted videos, statistics about state-level tax contributions, and employment from data centers, and a somewhat modern-looking red, white, and blue design with moving graphics on the landing page.
But finding out who was behind these videos and websites took a lot of digging. None of the state campaign websites have contact information and they were all registered by a proxy firm that gets web addresses for entities that want to remain anonymous. Most of the advertising itself was opaque; it’s not easy to research TV commercial spends and Google doesn’t disclose how much a company or person pays to promote individual ads. But there were signs of significant spending, as Meta’s Facebook and Instagram advertising disclosures revealed to me there was five-figure spending on static images, resulting in millions of potential impressions.
Eventually I was able to figure out what was going on. Each of the state campaigns also described themselves online as nonprofits but in fact, there is one nonprofit. It initially formed for the first state campaign, Virginia Connects. Its public 2024 tax disclosures show the campaign was formed by Levi and others working with the Data Center Coalition. On the DCC’s website, the trade group does have a landing page for what it calls “America Connects” and directs people to each state campaign but, as of today, the organization describes them as “regional coalitions” they “partner” with on “helping educate and engage citizens, policymakers, and other stakeholders on the data center industry, its benefits, and key issues including energy, water, economic development, and community engagement.”
In our interview, Levi explained these state campaigns aren’t just partners – they’re creations of a single nonprofit he said was “stood up” by the trade group named America Connects, and it began in 2024 through the Virginia Connects campaign. America Connects is now “a vehicle by which the broader community can engage and participate” in what Levi described as “broader industry messaging” that isn’t “just project by project.” It’s a direct response, Levi said, to the lack of any industrywide PR offensive challenging the mountain of public opposition to data centers shown in poll after poll. (With the exception of that one Meta ad campaign.)
“What we have heard very clearly is that a lot of the partners we work with, but also a lot of the voices from the public at large, is that the industry broadly needs to do a better job communicating. A better job talking about what we do, how we do it, and about the positive benefits of what localities can expect from data center development,” Levi said.
Levi told me the core of the group is at least three people: himself; Allison Gilmore, the chief operating officer of the DCC; and Kevin Hughes, the group’s treasurer and the chief external affairs officer at the data center developer STACK Infrastructure. He said I should expect “an expansion on the board” but declined to say who or what companies. Part of the team also includes LINK Public Affairs, a communications firm based in Virginia that helped on the initial campaign in the state.
I asked how an industry-backed campaign like this would help with the backlash. “Silence breeds mistrust, fundamentally. It is critically important as we see continuing conversations around the data center industry – what it does, what it doesn’t do, how it does – is part of informing those conversations,” Levi replied. “It is important the industry not be silent and be an active contributor in terms of the public dialogue around data centers. This is that.”
The DCC wouldn’t tell me how much is being spent on the America Connects campaign and it’s impossible to know from what’s publicly available.
Here’s what Levi would say about the money: that America Connects is funded by the data center “ecosystem generally,” including developers, companies within the supply chain, and “workforce voices.” But Levi wouldn’t even confirm if they were spending more than they had in just the Virginia campaign, which sort of logically has to be the case if they’ve expanded this effort.
“White it’s maybe not a satisfying answer, we will spend what we have to when it comes to ensuring we reach people where they are. But I’m not able to provide any kind of concrete number for you.”