In 2021, the Bipartisan Infrastructure Law designated $3.5 billion for the creation of four regional, commercial-scale direct air capture hubs, to be administered by the Department of Energy.

DOE ultimately awarded funding to a total of 21 projects at varying stages of development, including 14 grants to help projects assess the viability of hub locations, five grants for front-end engineering design, and two large grants for the construction and operation of commercial-scale facilities.

Two years on, 19 of those 21 projects are poised to lose their federal funding. 

Last week, when DOE confirmed the cancellation of 321 awards, the list included awards for ten hubs, all smaller awards focused on feasibility and FEED studies. 

A second, larger list of award cancellations circulating this week took an even more significant toll on the domestic DAC ecosystem. That list, which has not been confirmed by the DOE, names seven additional hub awards as slated for termination, most notably those for Project Cypress in Louisiana, and the South Texas DAC Hub. Federal cost share for those projects, which were managed by the Office of Clean Energy Demonstrations, would have totaled as much as $1.2 billion.

That leaves just two DAC hub awards — both earliest-stage — that have not yet been named on a DOE award termination list: a $2.5 million grant awarded to General Electric to conduct a feasibility study for a hub in the Houston area, and a $2.9 million grant for Siemens Energy to study a multi-technology hub based somewhere in the Midwest, with a satellite hub in Berkeley, California.

Dismantling DAC

The carbon removal industry, while still nascent, grew dramatically under the Biden administration, and DOE played a central role. Dozens of new startups entered the market over the last four years, and massive amounts of federal funding encouraged billions of dollars in private investment, largely by the major tech companies. The race to build artificial intelligence has made it even trickier for those companies to meet their already-challenging net zero goals, prompting some to view CDR as a “backstop” that could help them meet those targets without ceding AI growth.

But the Trump administration’s targeting of DAC as part of its promises to rescind Biden-era climate and clean energy funding isn’t actually much of a surprise, explained Erin Burns, executive director of Carbon180.

“I think sometimes there’s this question around direct air capture of where it lands on the political spectrum,” Burns said. It’s exceedingly clear where the administration falls on something like wind or solar, she added, but DAC is less obvious — particularly in light of Congress’ efforts to preserve the 45Q tax credit for carbon management, and the tech’s connection to the oil and gas industry.

But for those watching closely, Burns said, the second Trump administration has been “extremely clear” that they’re not fans of the technology, which was called out as a “green new scam” in the White House’s budget request for FY 2026.

And a second Trump administration was always going to be a challenge for the sector: Speaking with Latitude Media late last year, Burns said the DAC hubs program was her biggest concern heading into 2025. Part of that fear, she explained at the time, was that OCED’s being a relatively new office might make it “easier politically to disband” the hubs program.

Moving forward, Burns said, the industry will be watching carefully to see what happens at a state level. That doesn’t necessarily mean states passing new climate legislation, she explained, but rather things like investments in infrastructure and regulatory policy, particularly as it relates to permitting.

“It will be really interesting to see the reaction from those states who are, in their own ways, being very clear to signal that they want to host these sorts of projects,” she said, pointing to Louisiana and West Virginia in particular. 

In the meantime though, DAC developers may be inclined to look elsewhere. Regardless of federal funding, the legal ambiguity and regulatory uncertainty in the U.S. is making it difficult to build, Burns said.

At least one DAC company has already opted to relocate its efforts to Canada, seeking greater stability. Carbon Capture Inc., which received DOE funding to build Project Bison, said last week it was moving its first commercial pilot project to Alberta. 

The company decided to move the project after the first wave of DOE award cancellations, which hit $3 billion worth of projects back in May, CEO Adrian Corless told Bloomberg. Carbon Capture Inc. wasn’t on that initial list, but decided to relocate anyway, rather than grapple with ongoing uncertainty in the U.S. That project was ultimately included in the second round of cancellations announced last week.

Carbon Capture’s move to Canada comes at a time when that country — among others — is leaning into the carbon removal sector. In fact, Prime Minister Mark Carney, whose victory earlier this year was widely seen as a rebuke of President Trump, included carbon removal in his campaign platform. 

Canadian carbon removal developer Deep Sky, which will now host Carbon Capture’s project Bison at its first, 3,000 ton facility in Alberta, announced today that construction for its second facility will commence next year in Manitoba. That facility, which will be built in phases, will have a nameplate capacity of 500,000 tons, making it one of the largest in the world — though only around half as large as Project Cypress and the South Texas DAC hub were planned to be.

Pipeline problems

Project Cypress and the South Texas DAC hubs were slated to bring thousands of jobs and billions of dollars in private investment into their respective regions. Both projects ended up on OCED’s initial “hit list” that was passed around earlier this year, but a coalition that involved federal, state, and local leaders from both sides of the aisle, as well as industry associations, ultimately got Project Cypress removed from the list, at least temporarily.

The impact of losing smaller awards, for feasibility and FEED studies, may be less visible, and therefore less likely to draw the attention of lawmakers in Washington. But cutting those awards will inflict serious damage on the U.S.’ ability to foster a DAC industry at all, said Courtni Holness, managing policy advisor at Carbon180. 

“The essence of the design and feasibility studies was to innovate on a variety of different technologies to better understand how we can scale them, how we can drive down the costs, and how we can create durable regional benefits for the local communities and the local economy,” Holness explained. It’s that infrastructure that has made the U.S. such a competitive player in scaling the technology to date, she added.

Many of the projects on DOE’s list are still awaiting their official notice of cancellation, Holness said. Some have already commenced work and are expecting reimbursements from the agency for the costs incurred. Others were still getting ramped up. Where they go from here, regardless of project stage, is an open question.

Projects now have to decide whether they can find funding elsewhere, and it’s feasible for them to pursue legal challenges to the award cancellations. More fundamentally, Holness said, they’re still considering “what it means to accept the termination at face value.”