DOE To Provide $500M In Funding For Carbon Transportation

DOE To Provide $500M In Funding For Carbon Transportation - Carbon Herald
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The Department of Energy (DOE) has announced it will make available up to $500 million to further develop and grow the carbon dioxide transportation infrastructure in the United States.

The funding will be provided through the Bipartisan Infrastructure Law and will be distributed through a program managed by the DOE’s Office of Fossil Energy and Carbon Management (FECM) called “Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA)”.

“To successfully achieve our climate goals, it is critical to ensure that we have adequate infrastructure in place to accommodate the growing volumes of carbon dioxide over the next 25 years that we must capture from industrial facilities, power plants and future direct air capture projects and then transport to geologic formations for permanent storage,” said Brad Crabtree, Assistant Secretary of Fossil Energy and Carbon Management. “Making investments in additional transportation capacity now allows us to plan ahead for future growth and take advantage of economies of scale, resulting in significant monetary and environmental benefits by avoiding unnecessary future construction of separate, redundant transport networks.”

According to the DOE announcement the United States currently has an annual CO2 transport capacity of 60 million metric tons of CO2. To fully decarbonize by 2050 this will need to grow between six and thirty times based on different emission forecasts.

Relevant: ExxonMobil And EnLink Working Together On New CO2 Transportation Areas

The infrastructure program, though primarily focused on pipelines, will also include rail, trucks, barges, and/or ships, providing an array of options to emitters with the goal of creating economies of scale and adapting the different needs they have.

Heavy industry utilizing carbon capture will be the main party interested in this announcement but emerging technologies like direct air capture will also benefit from the infrastructure that will be developed.

Two DAC hubs are already being developed in South Texas and Louisiana and those are the two states that have seen the most progress with developing pipeline infrastructure.

Deadline for applications is July 30, 2024 and interested parties can make inquiries through FedConnect.

Carbon transportation developing in Europe

And several weeks ago five Northern European countries signed an agreement that will allow Denmark, Belgium, the Netherlands and Sweden signed agreement with Norway, setting up a framework for transporting and storing carbon dioxide in the North Sea region. Denmark and Sweden also signed a bilateral agreement, further strengthening the commitment of Northern European countries to manage their CO2 emissions.

Last week also saw the European Union also moved ahead with a program focused on carbon transportation. The TEN-T initiative, spanning the entire EU block is focused on developing logistics and transportation connections and directs funds toward rail, road and maritime routes with CO2 transport also included.

Read more: Five Northern European Countries Sign CO2 Transport And Storage Agreements

CIFIA in the works

Though communicated as a new program in yesterday’s announcement, CIFIA has been in development for a while by the DOE.

Similar to the Water Infrastructure Finance and Innovation Act (WIFIA), CIFIA should be able to provide security and predictability for carbon capture projects which are capital-intensive. The exact conditions of CIFIA were not shared yesterday but if WIFIA is any guide, then applicants could potentially take advantage of a long post-construction term, debt service deferral options, no penalty prepayments, and a single interest rate.

Back in March 2023 we spoke with John Ryan from InRecap LLC, a company focused on financing basic public infrastructure and his suggestion for those interested in the program was: “Applicants to the CIFIA program should review WIFIA’s loan feature precedents in some detail – very often they will be as valuable for carbon pipelines as they are for water infrastructure projects. If WIFIA’s track record is any guide, CIFIA’s statutory authority has a lot of potential for successful loan feature development.”

Read more: CIFIA Set To Benefit From Precedents From EPA’s WIFIA

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