U.S. Restores Funding for Major Carbon Removal Projects

The US Department of Energy has confirmed it will retain funding for key carbon removal projects, reversing earlier plans to cancel billions in clean energy investments.

The decision secures support for two major direct air capture (DAC) hubs originally approved under Joe Biden-one in Texas involving Occidental Petroleum, and another in Louisiana known as Project Cypress. Together, the projects were awarded more than $1 billion and are designed to remove over 2 million metric tons of carbon dioxide annually once fully operational.

The funding had come under review last year as part of a broader reassessment of clean energy programs by the administration of Donald Trump. However, Energy Secretary Chris Wright told lawmakers the projects demonstrated a “credible” pathway to delivering climate and energy benefits.

Direct air capture technology-an emerging solution within Carbon Removal-extracts carbon dioxide directly from the atmosphere. In addition to long-term storage, some captured carbon from these hubs is expected to be repurposed for fuel production, including aviation fuels, at a time when global energy markets are under pressure.

Although each project has so far received only an initial tranche of funding, the Department’s decision ensures continued development and signals cautious support for scaling carbon removal technologies in the U.S.

The move reflects a balancing act between reviewing federal spending and maintaining momentum in next-generation climate solutions, particularly as carbon removal gains attention as a critical tool in achieving long-term emissions reduction targets.

Restored CDR funding signals that even in a broader federal-rollback environment, specific climate technologies retain political and financial support. Our climate-action and responsible-investment teams help clients evaluate carbon-removal opportunities including DAC, BECCS and enhanced weathering against high-integrity offset requirements and long-term Scope 1 planning.