The Department of Energy has established another exceedingly ambitious goal for a climate-focused technology. Here’s what that means for building the new market.
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When the Department of Energy launched its Sunshot Initiative in 2011, its target to slash utility-scale solar costs by three-quarters over a decade was exceedingly ambitious. But four years before the government’s 2020 deadline to reach the $1 per watt goal, the industry met it.
A decade later, the federal government unveiled an even splashier mission: reaching $100 per ton for carbon removal technologies. Today, those costs range widely — from $15 to $1,000 per ton, depending on the removal pathway (and even that range is an estimate). The so-called “Carbon Negative Shot" is a clear nod to the earlier program’s success, but the ambitions are even greater as the climate stakes have grown. Once again, DOE has bargained that it can meet a target that touches the limits of impossibility, and marshal an entire industry in the process.
“Setting a shared goal or a shared target can inject a lot of energy into a given industry or a given type of technology,” said Kyle Clark-Sutton, who leads the clean industrial policy team for the think tank RMI’s U.S. program. “I think that’s what we’re seeing.”
This time around, though, the shared target is much more abstract. While the early solar industry sought to compete with existing fossil fuel electricity using (mainly) solar photovoltaics, carbon removal involves both a wide range of technologies — at varying levels of development — building a new industry, and finding durable and measurable ways to store all that carbon. To meet its goals, the Carbon Negative Shot must overcome skepticism about carbon removal’s role and inject certainty into the nascent industry, while realizing measurable and significant cost declines.
The government has several tools to try to make it happen: making its own investments to encourage the private sector and get projects installed, creating certainty around technologies by setting standards for what constitutes durable removal and storage, and providing an overall environment of policy support for carbon removal.
The overall cost goal — $100 per ton in the next decade — is the centerpiece of the Carbon Negative Shot program. To get there, DOE plans to invest in a portfolio of carbon removal technologies, rather than betting on any one solution. The portfolio includes both natural and engineered carbon removal. That portfolio approach is important, said Clea Kolster, partner and head of science at Lowercarbon Capital, because different removal pathways have different benefits, durability, and near-term scalability.
To be clear, the department doesn’t expect to reach $100 per ton for each technology, said Rory Jacobson, senior advisor for deployment at the Department of Energy’s Office of Fossil Energy and Carbon Management. Instead, it’s aiming for a $100 average carbon removal and storage cost across the portfolio of technologies it funds.
And the government will focus on technologies it believes have the potential to reach the gigaton scale — i.e. remove at least 1 billion tons of carbon from the atmosphere — by 2050, Jacobson added. To keep warming below 1.5 degrees Celsius with no overshoot will require removing between 100 and 1,000 gigatons of carbon through 2100, according to some scenarios from the Intergovernmental Panel on Climate Change.
With costs as high as they are today, aiming for $100 per ton appears exceedingly optimistic. And opinions certainly vary on the target’s achievability, and even its necessity. But industry investors and researchers say setting a cost target at all is an important step in encouraging growth. Without one, said Kolster, there isn’t anything to work towards.
Today, it’s unclear which technologies will be the most economical and scalable in the short-term and which will be most successful on a longer timescale.
“We don't actually know what's cost-effective yet,” said RMI’s Clark-Sutton.
Some of the costs, such as for engineering and design, are inherent to building first-of-their-kind projects. Others are due to high-cost materials needed for engineered carbon removal.
Thus far, DOE’s most high profile announcements have focused on direct air capture, one of the most expensive carbon removal options. In August the government said it would fund two direct air capture hubs in Texas and Louisiana at up to $1.2 billion. Today, DAC costs upwards of $1,000 per ton, due to the significant energy needed to run the machinery, the pricey solid or liquid chemical materials that react with the air to suck out carbon, and the steel and other materials required to build the projects. For certain DAC technologies, the absorber can account for nearly half of equipment costs and the air contactor can account for more than one-fifth of equipment costs, according to an analysis published earlier this year.
A keystone of the federal strategy to reduce costs involves funding research and development that may result in cost declines for specific hardware or system components. In the case of DAC, extending the life of the solid or sorbent or connecting projects to cheaper electricity sources could draw down costs, as could efficiencies in siting and economies of scale as more projects are built.
Research can also help determine the methodologies and standards needed to quantify how much carbon different technologies absorb, and the permanency of storage. (Today, more durable removal options, like DAC, are often the most expensive). Most U.S. carbon markets today are voluntary and plagued with uncertainty and even scandal, and nationwide standards are nonexistent.
“The biggest thing that everyone would love to have is more certainty around the carbon markets,” said Andrew Chang, the managing director of the New York branch of Activate, a nonprofit that helps scientists found climate-focused companies based on their technologies.
The Carbon Negative Shot program also allows for much more coordination across government, said Jacobson. The Department has a mandate to work across offices on the initiative, as well as with outside partners. Already DOE has partnered with the National Oceanic and Atmospheric Administration on ocean-related carbon removal projects and Jacobson said national labs will be important for research and development.
For Sunshot, funding research created a feedback loop with industry, Jacobson said, which allowed companies to prove out potential innovations on a commercial scale. He said the same could happen in carbon removal, where commercial industries for many technologies are nascent to nonexistent.
“One of the things that we view as a really important role of government is to help to fund the research and development required to get a lot of these approaches out of the lab and into the field, to start testing what works in practice, what doesn't,” said Clark-Sutton.
Getting many projects built, said Kolster, is the only way to assess whether a technology can actually come down the cost curve. Government support — either through upfront capital, purchasing offsets that projects produce, or via tax credits like 45Q — can reduce risk for private capital while also providing policy certainty that carbon removal has federal backing.
But even with billions in government dollars and support, the Carbon Negative Shot faces longer odds than Sunshot, which aimed to challenge an incumbent technology rather than create an entirely new market.
And there’s also the sheer scale of the nascent carbon removal industry’s task. Meeting certain IPCC scenarios would mean capturing and storing a volume of carbon that’s significantly greater than current reserves of the world’s most abundant materials, like coal, natural gas or oil; today, the largest carbon removal projects can remove just a few thousand tons of CO2 per year. To meet certain IPCC projections, said Rudy Kahsar, manager of climate-aligned industries at RMI, carbon removal will need to grow faster in the next two decades than any other industry ever has.
“The Carbon Negative Shot goals are fairly aggressive,” said Kahsar. “But we're going to need to hit those if we're going to be on track.”
Some have called carbon removal a costly distraction, others have said $100 a ton is a “fantasy.” But DOE points to Sunshot as an indication that improbable progress may in fact be possible.
“I don't think anyone knew at the time that there was going to be these rapid, incremental cost declines,” said Jacobson.