Is Trump about to squash America’s carbon-removal moonshot?

America’s fledgling carbon-removal industry is on edge following funding cuts from the Trump administration — and rumors of even further clawbacks to follow.

On Tuesday, a list of potential U.S. Department of Energy award terminations shared with Canary Media, and which circulated in Washington, included two giant direct-air-capture (DAC) hubs planned in Louisiana and Texas. Each project has received about $50 million to begin planning and developing CO₂-sucking facilities, and together they are slated to receive up to $1.1 billion in federal support.

However, a spokesperson for DOE said that it is ​“incorrect to suggest those two projects have been terminated” and that no determinations have been made beyond the award cancellations announced last week. On Oct. 2, the agency said it was scrapping 321 grants totaling over $7.5 billion — including nearly $50 million to help 10 smaller DAC initiatives begin concept and engineering studies for future installations.

“The Department continues to conduct an individualized and thorough review of financial awards made by the previous administration,” DOE press secretary Ben Dietderich said in an email to Canary Media. Following last week’s cancellations, Energy Secretary Chris Wright said more cuts would be announced, though he did not specify further.

The real and rumored grant terminations reflect the chaos and confusion that’s engulfed virtually every federally backed energy project since the start of the second Trump administration. Even developers whose awards haven’t been slashed — at least not yet — must try to navigate the lengthy and complicated funding process with an agency wracked by layoffs.

For carbon removal in particular, ​“a lot of these projects have kind of been in limbo this year, not sure of if they should commence and continue their work,” said Courtni Holness, the managing policy adviser for the nonprofit Carbon180. ​“There’s a lot of uncertainty around if they’re going to get continued funding, if they’ll be able to be reimbursed.”

While cutting greenhouse gas emissions is the most urgent and necessary way to tackle climate change, the world will also need to remove CO₂ from the atmosphere in order to avert the worst consequences of a warming planet, climate scientists say. However, most carbon-removal solutions are early-stage, expensive, and largely unproven at any meaningful scale, making government support critical to their success.

The Biden administration launched the Regional Direct Air Capture Hubs program in 2023 with $3.5 billion in funding provided by the 2021 bipartisan infrastructure law. The DAC initiative was part of a broader push by the DOE to help the private sector deploy novel technologies at commercial scale.

Funding for the Louisiana and Texas megaprojects ​“represented the largest ever public investment in carbon removal,” said Erin Burns, executive director of Carbon180. If completed as planned, the hubs are each expected to create thousands of jobs in the regions where they’ll operate.

The South Texas DAC Hub is an initiative of the Occidental Petroleum subsidiary 1PointFive. The project is located just south of Corpus Christi and is expected to be capable of removing over 1 million metric tons of CO₂ per year — roughly equal to the annual emissions from 2.5 gas-fired power plants. The project will use technology developed by Carbon Engineering, a company that 1PointFive acquired for $1.1 billion in November 2023.

DAC plants can use giant industrial fans to draw in large amounts of air, then separate out the carbon using chemical solutions or filtered materials. The captured CO₂ can be injected into deep geological formations, or it can be repurposed to make valuable industrial products, such as concrete and synthetic fuels.

1PointFive didn’t immediately return Canary’s request for comment on the purported DOE funding cuts.

The company is separately building another DAC facility in the Texas Permian Basin that is designed to capture up to 500,000 metric tons of CO₂ annually and could begin operating later this year. That project, called Stratos, will likely use captured carbon for ​“enhanced oil recovery,” a process that involves pumping the gas into older oil wells to force up any remaining fossil fuels.

Although Stratos didn’t receive a DOE grant, the operation will still likely benefit from the federal 45Q tax credit, which was expanded under the GOP budget law that passed in July — mainly for the benefit of carbon-capturing projects linked to oil production.

Meanwhile, in Louisiana, a coalition of companies is building a DAC hub called Project Cypress. Climeworks and Heirloom, two leading carbon-removal developers, are partnering with the applied-sciences organization Battelle to design and operate two facilities, which together are intended to capture over 1 million metric tons of carbon per year. The company Gulf Coast Sequestration will then take the captured CO₂ and permanently store it in a deep saline aquifer.

Climeworks, a Swiss company, will use its fan-driven technology, a version of which is already operating in Iceland. The U.S. startup Heirloom will build a separate plant for its own DAC process, which involves heating trays of limestone inside kilns to turn the mineral into a ​“sponge” that absorbs CO₂ from the atmosphere.

Vikrum Aiyer, Heirloom’s head of global policy, said on Tuesday that the company wasn’t ​“aware of a decision from DOE” to cancel its federal award and that the companies continue ​“to productively engage with the administration in a project review.”

Both the South Texas and Louisiana DAC hubs still face significant hurdles to crossing the finish line — including sourcing massive amounts of clean electricity to run their machines — even if they ultimately receive federal funding as promised. 1PointFive, for example, has run into local opposition, in part because of its association with the fossil fuel industry. Community advocates in both states have said they felt shut out of early planning processes that should have included them.

For DAC proponents, rescinding federal awards means the U.S. could risk losing out on the potential jobs and investment these first-of-a-kind projects are expected to create, especially as other countries press ahead. China, for example, has announced plans to build 37 domestic ​“carbon management and removal” projects by 2030, according to the Carbon Removal Alliance.

“Carbon removal is essential to meeting our climate targets and fueling energy security — that’s why it’s the world’s next trillion-dollar industry,” Carbon Removal Alliance and another advocacy group, the Carbon Business Council, said in a joint statement.

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