The US Department of Energy (DOE) is said to be looking into cutting grant funding for Project Cypress and the South Texas DAC Hub, the two largest carbon removal initiatives in the United States.
Speaking to Reuters, three anonymous sources shared that the DOE is evaluating cutting hundreds of millions of dollars in grant funding for these two projects. The sources asked to remain anonymous, as they are not authorized to speak publicly.
According to them, the two projects are part of a list of programs introduced by former President Biden’s administration that is now considered for elimination to fund tax cuts in Congress’s budget reconciliation bill.
The other 20 direct air capture (DAC) research projects highlighted for grants by Biden’s administration were not on the list, and there is no clarity on their status, the sources said.
This information follows the 45Q Repeal Act introduced by Pennsylvania Republican Representative Scott Perry at the beginning of March 2025, aiming to abolish the Section 45Q tax credit, which supports carbon capture, utilization, and storage (CCUS) technologies.
Reuters also cited an Energy Department representative who explained that it was conducting a department-wide review to make sure approved programs align with the priorities outlined by President Trump’s administration.
They clarified that the review is ongoing, stating, “Speculation by anonymous sources about the results of the review is just that—speculation.”
Project Cypress, developed by Battelle, Climeworks Corporation, and Heirloom Carbon Technologies, and the South Texas DAC Hub, an initiative of OXY subsidiary 1PointFive, Carbon Engineering, and Worley, are projected to have a combined annual carbon removal capacity of 2 million metric tons once they become fully operational.
Relevant: Rep. Scott Perry Proposes Legislation To Eliminate 45Q Tax Credit
This amount would exceed the capacity of Project Mammoth, the world’s current largest operating DAC facility in Iceland, launched by Climeworks, positioning the United States as a frontrunner in the carbon removal sector.
Having been selected for at least $500 million in DOE funding each, the two DAC projects have already received the first portions of their awards, totaling $50 million for each one of them.
If the funding now gets cut, project stakeholders signal that these finance-intensive DAC demonstration projects will not be able to continue their work, posing the question if they will even be able to survive the two months of uncertainty as the future of the funding reaches a final decision.
Read more: Five US Carbon Management Test Centers Selected For $101M DOE Funding
