Two direct air capture projects—one led by Occidental subsidiary 1PointFive in Texas and the other by Battelle in Louisiana—have landed up to $1.2 billion in funding from the U.S. Department of Energy (DOE), becoming the world’s largest investment in engineered carbon removal, the Biden administration said Aug. 11.

As the first two recipients of the Bipartisan Infrastructure Law-funded Regional Direct Air Capture (DAC) Hubs program, the demonstration projects aim to kickstart and advance development of the nation’s first two commercial-scale DAC facilities. Described as a giant vacuum that sucks CO2 directly from the atmosphere, DAC is seen as a key technology in moving the world toward net-zero emissions targets.

“Once we harness that pollution, we can trap it permanently deep underground, or we can turn it into building materials, or we can turn it into agricultural products or even clean fuels,” Energy Secretary Jennifer Granholm told the media prior to public announcement.

“If we deploy this at scale, this technology can help us make serious headway toward our net-zero emissions goals, while we are still focused on deploying, deploying, deploying more clean energy at the same time.”

Between 400 million and 1.8 billion metric tons of CO2 must be removed from the atmosphere and captured annually by 2050 to meet the Biden administration’s net-zero emissions target, by DOE’s estimates.

Together, Louisiana’s Project Cypress and South Texas’ DAC Hub are expected to remove more than 2 million metric tons of CO2 from the atmosphere annually. That’s equivalent to taking nearly half a million gas-powered cars off the road, Granholm said. The projects will form regional DAC hubs to “link everything from capture to processing to deep underground storage, all in one seamless process” and help the U.S. “prove out the potential of this game-changing technology so that others can follow in their footsteps.”

Working with Climeworks and Heirloom Carbon Technologies, Battelle is managing the project in Calcasieu Parish where plans are to capture more than 1 million metric tons of existing CO2. The captured carbon will be stored underground by geologic storage company Gulf Coast Sequestration.

“We’ve had a long-term, proven record of managing large, complex projects that bring latest technology systems together at scale, with the goal of making the world safer, healthier and more sustainable,” said Battelle CEO Lou Von Thaer.

“And this is a perfect example,” he said, citing the partnerships with the federal government, including seven national labs.

At the South Texas DAC Hub in Kleberg County, 1PointFive partnered with Carbon Engineering and Worley on a DAC facility designed to remove and store up to 1 million metric tons of CO2 annually.

Oxy CEO Vicki Hollub said the DOE’s selection of the project “validates our readiness, technical maturity and our ability to use Oxy’s expertise in large projects and carbon management to move this technology forward so it can reach its full potential.”

The facility is located on 106,000 acres of surface land leased from King Ranch, a privately-held agricultural company. Oxy has said the site is large enough to support up to 30 DAC plants.

The project will be powered by solar energy, Hollub said.

FEED work for the South Texas hub’s first DAC plant and preparations to drill test wells needed to gather data for a Class VI well permit are underway, 1PointFive said in a news release Aug. 11. The plant’s design is adapted from Stratos, 1PointFive’s first commercial-scale DAC plant under construction in the Texas Permian Basin.

Stratos is expected to start up in 2025.

Neither project will use CO2 for enhanced oil recovery, said Kelly Cummins, deputy director of the Office of Clean Energy Demonstrations. She added that the projects are focused on making sure the technology can scale commercially with revenue streams that support uptake of the technology.

“I will also say that the nonfederal funding is at least 50% of the contribution to these projects,” Cummins said. “So, we want to make sure that these companies and these projects are financially viable in the long term, so we're not restricting revenue sources.”

Today’s primary market is voluntary with significant commitments from a handful of corporate leaders, added Noah Deich, deputy assistant secretary for the DOE’s Office of Carbon Management.

“There’s greater demand than supply, and these projects will be really critical for helping to fill that gap once they do start to come online,” Deich said.

The potential awards should help de-risk capital deployment in the medium term, analysts with Tudor, Pickering, Holt & Co. said in a note Aug. 11.

“We suspect investors currently ascribe little value to the DAC business given its nascent stage, but awards like these (and potential third-party funding) will help to de-risk capital deployed into the development of the 1PointFive business over the coming years,” TPH said in the note.

Meanwhile, eyes are on Stratos “to better understand construction costs, timelines, and viability of expanding.”

Funding for two more potential DAC hubs are expected in the coming years, as the Bipartisan Infrastructure Law allocates $3.5 billion to create four hubs.

Along with the Louisiana and Texas projects, the DOE said it has selected 19 more projects (14 feasibility studies and five FEED studies) for award negotiations to support early-stage project development as it assesses the viability of future DAC Hub demonstrations.