Sarah Braverman

Policy Analyst

Zara Ahmed, PhD

Senior Policy & Strategy Manager

Shortly after midnight on Tuesday, Congress released the long-awaited Fiscal Year (FY) 2023 discretionary funding package. The $1.7 trillion omnibus bill would represent a huge step forward for climate policy and programs, with enhanced funding and support for carbon management, carbon capture, and carbon removal pathways. Highlights of the 4,155 page bill include $140 million for carbon dioxide removal technologies, $380 million to further innovative solutions for low- or no-emission alternative fuels, $685 million for industrial decarbonization, and the creation of an Industrial Emissions Reduction Technology Development Program inside the Department of Energy (DOE). The provisions in this funding package build on the historic climate investments made by the federal government over the past year, including those provided by the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act of 2021.

Deep Dive: Carbon Direct and Microsoft Criteria for High-Quality Carbon Dioxide Removal

The proposed investments signal awareness by lawmakers that an increase in public funding is needed to catalyze innovation in climate solutions. The bill also demonstrates growing recognition within Congress that carbon reduction technologies and carbon dioxide removal pathways must be paired in order to have a meaningful impact on the climate crisis. We at Carbon Direct believe that carbon removal is essential to achieving climate goals.

While the package must still be passed by Congress and signed by President Biden, the bipartisan support of these initiatives should hearten the climate community as a positive step forward.

More work (and money) will be needed in the coming years, ranging from permitting reform to the development of reporting standards. Regardless, if this bill passes, actors across the carbon management ecosystem should stay tuned for a slew of funding opportunities from the DOE. It will require cross-sectoral participation to turn these policy goals into practical realities.

Here are 10 of the most notable climate investments in the FY 2023 Consolidated Appropriations Act*:

  1. Carbon Dioxide Removal - $140 million for research, development, and demonstration of carbon dioxide removal technologies. The DOE is directed to establish a competitive purchasing pilot program for the purchase of carbon dioxide removed from the atmosphere or upper hydrosphere, a new program that could advise future federal procurement of CO2 removal.

  2. Carbon Management Technologies - The DOE is directed to conduct Carbon Capture, Utilization and Storage (CCUS) activities, including front-end engineering and design studies, large pilot projects, and demonstration projects that capture and securely store volumes of carbon dioxide from fossil energy power plants, industrial facilities, or directly from the air. This new measure matters because this is often the very hardest capital for project developers and innovators to raise. Among other funding, the bill provides:
    • $50 million to support work at multiple sites to pursue research, development, and deployment of carbon containment technologies and proximate carbon dioxide capturing systems that also meet regional economic and ecological restoration policy goals such as catastrophic wildfire mitigation and job creation;

    • $15 million for research and optimization of carbon capture technologies at industrial facilities;

    • $20 million for research and optimization of carbon capture technologies for natural gas power systems;

    • $75 million to support front-end engineering and design studies, including for the development of a first-of-its-kind carbon capture project at an existing natural gas combined cycle plant, large pilot projects, and demonstration projects;

    • $15 million for research, development and demonstration activities related to the indirect sequestration of carbon dioxide in ocean waters; and

    • $10 million for research and development of carbon utilization using algal systems.

  3. Industrial Decarbonization - $685 million for industrial decarbonization activities. The DOE is directed to establish the Industrial Emissions Reduction Technology Development Program for clean industrial research, development, and demonstrations that are both sector specific and technology-inclusive.

  4. Alternative Fuels - $380 million to further the research, development, testing, and demonstration of innovative technologies and solutions for low- or no-emission alternative fuels for ongoing efforts to develop technologies and low carbon fuels that will reduce emission in shipping, aviation, agricultural, and long-distance transportation. The agreement provides $10 million for research and development of engine architectures that integrate low-carbon fuels like ethanol and biodiesel, including the performance of these engines on higher blends of renewable fuels.

  5. Hydrogen - $316 million for hydrogen energy and fuel cell technologies. The agreement provides $15 million for technologies to advance hydrogen use for heavy-duty transportation, industrial, and hard-to-electrify transportation applications including trains, maritime shipping, and aviation. The agreement provides $10 million for novel engine designs that can achieve significant efficiency improvements in hydrogen combustion. The DOE is directed to maintain a diverse program that focuses on early-, mid-, and late-stage research and development and technology acceleration, including market transformation. The agreement provides not less than
    • $100 million for H2@Scale;

    • $60 million for technologies to advance hydrogen use for hard-to-electrify transportation applications, including trains, maritime shipping, and aviation;

    • Up to $30 million for Fuel Cell Technologies;

    • $10 million for perovskites and other catalysts, as well as for catalyst supports for hydrogen carriers; and

    • $10,000,000 for a demonstration project focused on producing hydrogen from the processing of produced water and mineral substances and transporting hydrogen using existing energy infrastructure.

  6. Energy Transitions Initiative - $15 million for the Energy Transitions Initiative (ETI), including the Technology-to-Market and Communities subprogram, to support initiatives to address high energy costs, reliability and inadequate infrastructure challenges faced by island and remote communities.

  7. Workforce Development - $5 million to support expanding efforts to include students from underserved institutions in the technology development programs within the DOE’s portfolio of manufacturing, solar, transportation and grid/energy storage through a university which has existing partnerships with several Historically Black Colleges and Universities and Minority Serving Institutions, and participants in several DOE applied energy research programs. DOE is also encouraged to continue to work with 2-year, community and technical colleges, labor, and nongovernmental and industry consortia to pursue job training programs, including programs focused on displaced fossil fuel workers, that lead to an industry-recognized credential in the renewable energy and energy efficiency workforce.

  8. Bioenergy Technologies - The agreement supports research to develop the foundation for scalable techniques to use carbon dioxide produced in various plants, such as in biorefineries, to produce higher-value fuels, chemicals, or materials. The bill provides $100 million for Conversion Technologies, $44 million for feedstock technologies research, and $40 million for algae-related activities, among other investments. The agreement provides $44 million for feedstock technologies research and the Biomass Feedstock National User Facility as well as $40 million for algae-related activities. Learn about the Carbon Direct proto-protocol for bio-oil sequestration.

  9. Carbon Transport and Storage - $40 million for CarbonSAFE and $20 million for the Regional Carbon Sequestration Partnerships (the Regional Initiatives). The DOE is directed to expeditiously award the fiscal year 2022 funds and to provide the Committees regular updates on these activities. DOE is encouraged to support surveys and site characterization of promising ocean-based geologic formations and to partner with non-federal entities with the technological capabilities to accelerate and improve this process.

  10. Energy Storage - $540 million for research, development, demonstration, commercialization, and deployment of energy storage. There is support for the DOE’s Energy Storage Grand Challenge and Long-Duration Storage Shot Initiatives, which includes cost-shared demonstrations of energy storage technologies.

These measures together are breathtaking in their scope and imagination. They represent a decisive investment in deep decarbonization that emphasizes the carbon management enterprise, including new technologies, approaches, practices, agency structures, and business models.

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*Language in this section is largely from the Energy & Water Development Explanatory Statement.