In 2021, Congress gave the U.S. Department of Energy (DOE) $3.5 billion for the Regional Direct Air Capture Hubs program as part of the Infrastructure Investment and Jobs Act (IIJA). After a year and a half of uncertainty, project terminations, and reprogramming under the current administration, roughly $1.14 billion in already-awarded projects survives (including already-disbursed funds and assuming all projects that have not been canceled will ultimately receive their full awards), although only around $31 million (~2.5%) of this amount has actually been disbursed to date.
$1.04 billion was reprogrammed by Congress in FY26, and the remaining $1.31 billion is in limbo and may remain there until Congress pushes for action or a new administration comes to office. In the meantime, there are proposals for statutory changes that could be implemented to improve the effectiveness of future DAC Hub funding opportunities.
Background on the Regional Direct Air Capture Hubs Program
Direct air capture (DAC) extracts carbon dioxide (CO2) directly from the atmosphere for either permanent storage or use in low-carbon, circular fuels, chemicals, and materials. It is increasingly viewed as a critical complement to the broader portfolio of decarbonization technologies, as it can compensate for emissions that cannot be eliminated otherwise when paired with durable storage or be used to generate carbon-neutral fuel and chemical production. Despite headwinds in climate and carbon tech, numerous companies are still funding carbon dioxide removal and DAC, exemplified through Frontier’s recent announcement of an additional $915 million of support from companies including Stripe, Google, and Anthropic.
In addition to environmental benefits, deployment of DAC systems can create domestic manufacturing jobs in upstream and downstream industries like concrete and welding, provide relevant opportunities for oil and gas workers potentially displaced by the energy transition, strengthen energy security through use of DAC CO2 for enhanced oil recovery, attract revenue from foreign countries through sales of carbon credits, allow producers of waste heat (such as data centers) to monetize this otherwise wasted resource by helping power DAC systems, and advance science more generally by promoting R&D in fields like fundamental materials design.
IIJA, also known as the Bipartisan Infrastructure Law, was passed in late 2021. Section 40308 of the law authorized, and Division J of the law appropriated, $3.5 billion for DOE to execute the Regional DAC Hubs program. Similar to the hub model also utilized by the IIJA Regional Clean Hydrogen Hubs, this program was designed to fund the development of DAC hubs around the country that, among other things:
Have the capacity to capture, process, and store or use at least 1,000,000 metric tons (i.e., a megaton) of CO2 per year;
Are located in areas with existing or retired carbon-intensive fuel production or industrial capacity;
Are located in geographically diverse parts of the country and in regions with high potential for carbon storage or utilization;
Have larger capacities, more expansion potential, and lower costs; and
Can create training and long-term employment opportunities for the greatest number of residents.
Building on top of a history of the 45Q tax credit, prior base appropriations for DAC R&D, and $115 million of additional DAC prize funding in the IIJA, the DAC Hubs program represented an unprecedented level of commitment to the DAC industry, and successful execution of the program still has the potential to cement the United States as the world leader in this technology.
Funding Opportunities and Awards
In the previous administration, the Office of Fossil Energy and Carbon Management (FECM), now the Office of Hydrocarbons and Geothermal Energy (HGEO), partnered with the Office of Clean Energy Demonstrations (OCED) and the National Energy Technology Laboratory (NETL) to develop and issue funding opportunity DE-FOA-0002735 in late 2022. This was meant to be the first of multiple funding opportunities for the DAC Hubs program, and it made available $1.236 billion of the $3.5 billion across three topic areas:
Because few companies can credibly build a megaton-scale hub, DOE decided to take a phased approach to the DAC Hubs program. It was expected that there would be a larger number of “Feasibility” and “Design” projects—focused on concept formulation and engineering, respectively—and that these would feed into larger projects in future rounds of funding while providing more time for the industry to mature. Even the “Build” projects were likely to scale up to megaton capacities in phases.
In August 2023, DOE announced the selection of 21 projects from this first funding opportunity, consisting of 14 Feasibility projects, five Design projects, and two Build projects. The original list of Feasibility and Design projects is available here, and additional details for the two Build projects can be found here. After the selections were announced, the lengthy process of contract negotiations to arrive at formal awards began. The Feasibility and Design awards were negotiated through NETL, and the Build awards were negotiated through OCED.
Each negotiation required the development and DOE approval of multiple elements, including project objectives, plans for project management, community benefit plans, budgets, cybersecurity plans, National Environmental Policy Act documentation, and more. Contracts could only be finalized and budget periods and formal project activities could only begin once each element was complete and approved by DOE.
By October 2024, contracts were successfully negotiated for 18 out of the 21 projects; only one Feasibility and two Design projects remained under negotiation. Before the administration changeover, an additional Design project was successfully negotiated, leaving only one Feasibility and one Design hub without finalized contracts. As all the DAC hubs except for Siemens Energy’s and the University of North Dakota’s are present in the federal spending tracking website USAspending.gov (and summarized in the table below), these are likely the hubs for which contracts have not been finalized.
As the hubs from the first funding opportunity were negotiating their contracts, OCED and FECM began developing an additional funding opportunity to spend down the remainder of the DAC hub funds. After conducting a Request for Information (RFI) on mid-scale DAC facilities in February 2024 and conducting a substantial amount of internal analysis, DOE issued a Notice of Intent (NOI) for the next round of the DAC hubs in September 2024 followed by the formal Notice of Funding Opportunity in December 2024.
To reflect progress from the first round of the DAC hubs, developments in the DAC industry, and responses to the RFI, the second funding opportunity contained three topic areas distinct from those in the first funding opportunity:
This round would have awarded up to $1.8 billion in funding. Taken together with the ~$1.2 billion from the first funding opportunity, this would have left several hundred million dollars remaining of the original $3.5 billion that Congress appropriated. Some of these remaining funds were allocated to various administrative and program direction-related set-asides applied by DOE (such as for the Technology Commercialization Fund), and any funds left over after that would have been spent at a later date, especially considering that the second funding opportunity was intended to be a recurring program.
Terminations, Retentions, and Reprogramming
By the administration changeover in January 2025, several of the hubs from the first round had already kicked off implementation work as part of their first budget periods. After the changeover, work ground to a halt given the DOE communications blackout and uncertainty about what was going to continue under President Trump’s new administration. While concept papers for the second funding opportunity were due by the end of January 2025, this opportunity was also pulled shortly after the administration changed, and there have been no updates on it since.
According to data from USAspending.gov, about $15 million was disbursed for awarded and negotiated DAC hubs between December 31, 2024, and September 30, 2025, with over $5 million to Project Cypress and over $1 million each to Arizona State University (ASU), the Southern States Energy Board (SSEB), and CarbonCapture Inc. Between September 30, 2025, and May 31, 2026, around $11 million more was disbursed, with over $5 million more to Project Cypress, over $3 million more to ASU, and over $1 million more to SSEB.
While these are non-negligible sums, they amount to only around 2.5% of the total value of announced awards from the first round of the DAC hubs. All projects also continue to face significant uncertainty surrounding the continuation of the program and what activities, if any, will continue to be approved for funding, resulting in ongoing doubt and a lack of confidence in the future of the DAC industry in the country. Against a baseline without the funding freeze, “ghosting,” and terminations, the program has effectively been stalled.
In October 2025, a formal award termination list came from DOE. This list targeted projects with prime recipients headquartered in “blue states” and featured 10 DAC hubs from the original set of selectees. While this round of terminations targeted awardees headquartered in “blue states,” many of the projects would have involved substantial operations or funding of project partners in “red states.” For example, CarbonCapture Inc.’s project was initially planned to be in Wyoming (and later Louisiana), GE Vernova’s Houston Area DAC Hub was going to be sited in Texas, and one of the University of Illinois’ hubs was going to be in Florida.
While not every hub was immediately terminated, an unconfirmed list of projects that were allegedly under consideration for termination was leaked several days later. This list included both two Build hubs along with three Feasibility hubs (Louisiana State University, Fervo, University of Kentucky) and two more Design hubs (ASU and SSEB). If each of the additional projects on the leaked list had been terminated, only the Chevron and ASRC projects, both connected with oil and gas companies, would have remained (as noted above, the University of North Dakota and Siemens projects were likely never definitized and their fate is uncertain).
However, in April 2026, DOE provided an award retention list to Congress listing projects that had been stalled by DOE without formal termination actions that the Department was now indicating it planned to allow to continue. This list includes five Feasibility hubs (Louisiana State University, Fervo, University of Kentucky, Chevron, and ASRC), two Design hubs (ASU and SSEB), and both Build hubs (Project Cypress and South Texas). Following retention, one would expect contract modifications and funding to continue flowing to the hub projects. However, according to USAspending profiles for Project Cypress and South Texas, neither of the two Build hubs has had its contract modified or has received new funds over the past several months. Other projects are in a similar position, and ongoing uncertainty and delays may still result in project cancellations by the awardees themselves.
While the team overseeing carbon dioxide removal at FECM/HGEO was hollowed out, there is still a very skilled group of federal project managers in place at NETL that will oversee any remaining projects that progress through their budget periods.
There have also been some noteworthy developments in Congress. The FY2026 spending agreement covering Energy and Water Development (EWD), signed into law in January 2026, reprograms unobligated balances from some IIJA accounts to other priorities, including nuclear funding. Included in this reprogramming is “$1,040,000,000 of the amounts made available to carry out section 969D of the Energy Policy Act of 2005.” While this section of the Energy Policy Act (starting on page 380) covers multiple carbon removal programs, the reprogrammed sum is very likely referring to the DAC Hubs program given its magnitude and the explicit reference to Section 40308 of the IIJA in an earlier version of the FY26 EWD budget.
The Joint Explanatory Statement for the final FY2026 agreement also states, “The Department is directed to continue carbon removal projects consistent with the objectives established in Section 969D(j)(2)(B) of the Energy Policy Act of 2005.” Additional direction is provided for briefings on any redistribution of OCED funds. So, while the budget’s $1.04 billion reprogramming reduces the total size of the DAC Hubs program from $3.5 billion to about $2.5 billion, it appears congressional stakeholders are still interested in the continuation of the program and other carbon removal activities; they had the opportunity to reprogram the full unobligated balance but chose not to.
With that said, the administration is continuing its efforts to pull back this funding. The President’s Budget Request for FY27 proposes cutting “$15.2 billion in IIJA funding originally provided to […] remove carbon dioxide from the air,” which would likely include the remainder of unobligated DAC hubs funding. As a result, continued attempts to rescind or reprogram the remainder of the funding or to slow-walk existing projects would not come as a surprise.
What Comes Next
If we assume that the nine retained projects, totaling around $1.14 billion in federal funding, are fully funded and that the reprogrammed $1.04 billion will not be restored, then this leaves around $1.3 billion of unobligated DAC hubs funding. DOE has not indicated plans to spend these funds on a new DAC program and only shows interest in further cuts given its recent budget requests. Therefore, if the funds are not reprogrammed, rescinded, or otherwise spent on something else, they may sit dormant until a new administration takes office or at least there is a turnover in DOE leadership. In terms of termination reversals, at least the University of California is involved in a lawsuit, Thakur v. Trump, which includes their DAC hub project, and there could be other implications arising from the administration’s admission of targeting projects solely on political grounds.
In the meantime, there may be a few ways to improve the program, either at the statutory level or during implementation, based on lessons learned from the program to date and how the DAC industry has evolved over the past few years. Carbon180’s recent roadmap notes that reducing the annual capacity requirement to 100,000 metric tons per year across a larger number of projects would better match what the industry is currently capable of delivering while promoting technological and geographic diversity and increased market competition. This kind of change would align with the second funding opportunity’s emphasis on mid-scale hub funding.
The roadmap also notes the potential to expand the use of the funding to demand-side support, possibly via contracts-for-difference. Providing explicit authority for DOE to use Other Transaction Authority could make it easier for the Department to more flexibly provide demand-side support for DAC hubs via offtakes for credits or utilization products. This could represent a broader opportunity to build the muscle of federal procurement of carbon removal credits and other clean technologies while also allowing projects to raise more private capital on the basis of credible federal offtake agreements.
In addition, advocates and Congress can continue thinking about and building coalitions for the future of DAC policy support. This may include opportunities like expanding DAC’s support from the 45Q tax credit, boosting base appropriations at relevant DOE offices for DAC research and development, continuing to fund CO2 transport and storage programs that support end-to-end carbon removal via DAC, protecting and ensuring execution of other IIJA funding for DAC prizes, and implementing other kinds of tax credits or additional demand-side support.
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Thank you to Jocelyn Brown-Saracino, Noah Deich, Paul Donohoo-Vallett, Sarah Godek, Aaron Morales, Tarak Shah, and Janie Thompson for their invaluable feedback and support on this piece.
This piece was drafted by trusted and vetted alumni of the U.S. Department of Energy. Any views and opinions expressed are that of the author(s) and do not reflect those of the DOE Alumni Network.