James Lawler: [00:00:00] Welcome to Climate Now, I’m James Lawler.
The US Department of Energy, the DOE, was established in 1977 with two key missions: to carry out defense responsibilities relating to nuclear weapons, and to bring together under one department the “loosely knit amalgamation” end quote of various energy projects responsibility for which was at the time scattered across the United States government. The motivation for the Department of Energy Organization Act of 1977, which created the Department, was to develop a better-coordinated national energy strategy in the face of new challenges – namely, two OPEC energy crises, and the growing nuclear energy industry.
Since then, the DOE’s responsibilities have evolved with the challenges that the country has faced.
Today, one key dimension of the DOE’s role to ensure national energy security is to support low-carbon energy production and, related: carbon management projects – a term which refers, broadly speaking, to any project that has the effect of achieving net CO2 emissions reduction.
Within that remit is a responsibility to advance carbon dioxide removal, or CDR. Why? As a reminder, to reach net-zero carbon emissions by mid-century, the US will likely need to remove at least a billion metric tons of carbon dioxide from the atmosphere each year. How is the DOE supporting that goal?
We spoke with Rory Jacobson, the acting [00:01:00] division director for carbon dioxide removal in the Office of Fossil Energy and Carbon Management, or FECM to better understand the DOE’s Role and work.
Rory Jacobson: So, I’m Rory, I’m the division director for carbon dioxide removal within the Office of Fossil Energy and Carbon Management. That carbon management part is a bit newer for us. That was actually introduced on July 4th of 2021 and really reemphasizes our office’s focus on dealing with the carbon dioxide emitted through industrial processes out of flu stacks. And my role particularly is to support technologies that have the capability to reduce greenhouse gases in the atmosphere. Supporting entrepreneurs, supporting universities, national labs, really anyone with the capability [00:02:00] to reduce the concentration of CO₂ and other greenhouse gases in our atmosphere.
James Lawler: Great. So talk about the mandate of FECM and what was that initially? And then how has that developed to what it is today?
Rory Jacobson: Our directive and our mission within the office of fossil energy and carbon management is to produce domestic energy resources at the lowest cost possible while producing high-paying jobs and equitable employment across the United States, and doing so in a way that helps us achieve our Paris Agreement commitments. So, that includes things like rare earth elements, critical minerals, but it also includes things like point-source carbon capture on, on existing fossil fuel generation units. It includes things like cement facilities. It includes things like direct air capture facilities. We have a whole suite of different carbon management technologies and energy technologies that we’re engaging with within our office.
James Lawler: So, we, we do want to focus today on the Department of Energy’s efforts related to CDR, or carbon dioxide removal. So I wonder if you could [00:03:00] start just by explaining what is CDR, and why is that something that, you know, has been determined to be within the department’s remit, and to deploy taxpayer dollars towards?
Rory Jacobson: So I’ll start with the simple answer, which is that Congress asks us to, on behalf of all of the taxpayers that they represent. This is closely following a National Academies study that indicated that one, carbon dioxide removal is crucial to meeting our Paris Agreement targets, right? The idea is that we’ve emitted enough carbon dioxide into the atmosphere, we have to remove some of that, both to abate residual emissions, the parts of our economy that we can’t decarbonize, but also we have to remove legacy emissions, and we have to give those tools to future generations to deal with that. We now have a Carbon Negative Shot across the entire Department of Energy, and that means that the entire Department of Energy is coordinating and collaborating on this objective to get to $100 per net ton CO₂ equivalent removed from the atmosphere by [00:04:00] 2032.
James Lawler: For anyone who’s newer to this space or less familiar with the jargon, CO₂ equivalent emissions are a way of equating the warming effects of any greenhouse gas emissions to the quantity of CO₂ it would take to have the same warming effect. Methane’s warming effect, for example, is about 30 times as potent as CO₂’s warming potential, so 1 ton of methane would be considered 30 tons of CO₂ equivalent emissions.
When Rory talks about net tons removed, he’s referring to how much CO₂ a CDR technique removes, minus any emissions from the process itself, whether those are from powering the system or manufacturing steel for the equipment. And finally, the price is how much it costs to remove that net ton of CO₂ equivalent emissions. Here’s Rory to explain why the Department of Energy is considering all greenhouse gas emissions in this equation.
Rory Jacobson: The important piece is that we’re [00:05:00] counting all greenhouse gases. And so, we’re drawing our life cycle boundaries as broadly as we can because we want to make sure that we’re accounting for all the greenhouse gases that go into this process. You know, CO₂ is the easiest way for the average person, including policymakers like myself, to talk about the impacts that greenhouse gases have on global warming. I think the IPCC has done a phenomenal job of telling us how to think about those things, especially as policymakers.
James Lawler: Yeah. So in terms of the, DOE Carbon Negative Shot, and the a hundred dollar target, how hard does a hundred dollars per ton seem to you today, based on, you know, the flow of projects that you see across your desk and the prices we’re actually achieving today in the market versus what industry thinks we can get to in the future. I mean, how hard is $100 per ton likely to be?
Rory Jacobson: This is not a low bar. I think it’s tough, but I also think that there’s important qualifications around that [00:06:00] $100 target, right? The Department of Energy is focused first and foremost on reducing emissions across every single sector. That is our priority. That is the most important thing that we can possibly invest in. But, like I talked about earlier, the, the problem is, is that we’ve emitted enough CO₂ that it’s important to have these technologies ready to deploy, 2030 and beyond, to make sure that we’re able to clean up residual emissions.
You know, we’re not looking at carbon dioxide removal as an out to not clean up those opportunities, but we know that we’re likely to need it. A hundred dollars per ton is hard. And not all technologies are going to make that threshold, and that’s perfectly okay. We know that we need some of them for very different reasons. And there are also complex and community dimensions, things that folks are willing to host in their backyard, technologies that, that folks are willing to get excited about, to, to partner with, that can be opportunities for their region based on their resources.
And so the cost of any one of these carbon dioxide removal pathways deployed in one geography will [00:07:00] look very different than another. And that, that’s based on electricity costs, that’s based on cost of labor, that’s based on a wide variety of different opportunities.
James Lawler: Yeah. And I think, we have to acknowledge that we’ve got to do something about the CO₂, one way or the other. You know, we’ve got to remove it, develop new technologies that don’t, that don’t emit it, and we need to do it at the lowest possible price. And a hundred is getting, is getting pretty low, in terms of dollars per ton.
Rory Jacobson: I think that’s right. And I think we see that things like natural climate solutions could potentially even have negative costs, right? And, and that seems confusing, but there are a wide variety of co-benefits to those opportunities, such that the intervention actually is beneficial in terms of cost to the farmer or to the forester. And then there are other technologies where we’re looking at things like direct air capture, right? Technologies that remove CO₂ from the ambient atmosphere. Those facilities are inherently costly. They require a lot of energy and heat to operate. We can decarbonize that energy and heat. [00:08:00] Absolutely. But, but it’s always a cost. And I think, it’s also a public good, right? We are reducing the concentration of CO₂ in the atmosphere. And I see that as a net public good inherently.
James Lawler: Yeah. So tell us about this, the Voluntary Carbon Dioxide Removal Purchasing Challenge, which is a new initiative that your office is spearheading. How is that meant to work in terms of engaging the private sector in, in CDR efforts?
Rory Jacobson: So, I’m going to start by naming actually another initiative, which is, last year, in financial year 23, the department already got an interesting instruction from Congress, which was to start a pilot CDR purchasing initiative. And we stood up what is now the Carbon Dioxide Removal Pilot Purchase Prize. And we have $35 million that’s committed to actually buying carbon dioxide removal credits as the federal government of the United States. And I think that’s a huge opportunity. In September, we kickstarted the rules for this program. We’ve now received applications, and we’ll [00:09:00] release semifinalists that will receive a cash prize to participate as semifinalists towards an opportunity to actually provide the U.S. federal government with carbon dioxide removal credits.
James Lawler: A note to our listeners, we recorded this interview at the beginning of April, and since this interview, at the end of May 2024, the FECM has released their semifinalists. If you want to see their list, the link will be in our transcript at climatenow.com. Back to what Rory had to say about why the DOE is helping to fund these projects:
Rory Jacobson: Now, where this actually leads into the Voluntary Carbon Dioxide Removal Purchasing Challenge that you mentioned is that we can’t do this alone. The federal government has an outsized role in purchasing and elevating the importance of demand sides opportunities for the carbon dioxide removal market. I mean, it is a public good. We need folks to buy tons of carbon dioxide [00:10:00] removed from the atmosphere to make this work, or we need governments to take action and create demand for these technologies.
And that’s what we’re trying to do as Department of Energy. We can’t do that alone. And we’ve acknowledged, I think importantly, that the private sector has an outsized role in doing this. We are, we are not the first folks to think that buying carbon dioxide removal is important for climate.
In the background, we see regulatory rulings from the SEC, Securities Exchange Commission, thinking about how do companies disclose this sort of thing, right? Like, if you’re buying the highest quality carbon dioxide removal, if you want to do the best practices, how do you think about telling your board, your shareholders, that you’re doing that sort of exercise? And, I think one of the biggest challenges that the carbon dioxide removal market has faced, is lack of transparency. And there are some phenomenal people doing the work today, and, and it’s a really challenging job.
To get to your question, [00:11:00] James, what is DOE doing? We intend to build out a program. And I want to be clear with the public that that is what that means, right? Like, we have aspirations to build this program, we’re seeking public comments. And to folks listening, please do send comments. I will read every single one of them. I promise. Because we take your feedback very seriously and how we structure this program because we want to optimize for transparency.
Note to listeners: This comment period is now closed.
James Lawler: So, Rory, what is the concept here, what are you asking of the private sector?
Rory Jacobson: So, James, I think that’s a great question. It is a notice to the private sector, to state and local governments, to tribes, anyone that wants to engage with us, that there is an opportunity to work with the Department of Energy, to disclose what your carbon dioxide removal purchases or deliveries are. And I think we’re looking at both ends of that. And maybe the easiest piece for me is to start on folks who buy carbon dioxide removal credits.
There are a number of different reasons that folks would do this, right, or large corporates would do this, local governments would do this. The [00:12:00] first is probably meeting a climate target, right? In order to get to whatever target that they’ve set requires some amount of carbon dioxide removal. They’ve set a target that is so awesomely ambitious that they actually need to remove carbon dioxide from the atmosphere. And I think we should encourage that. The second piece is they actually just want to support it—philanthropically, for other reasons, that they think this is an important industry to grow, and I think both of those reasons are super valid. And I think we want to know, first of all, why people are buying these credits. I think that’s a huge piece of this that we don’t see in press releases, the average person in the world doesn’t engage with very often, right?
James Lawler: Yeah. And so, Rory, from where you sit and all the thinking that you’ve done about carbon removal, if you were to put yourself 20 years into the future, how, ideally, would you want to see carbon dioxide removal deployed? Like, do we treat this like we treat trash removal? It’s like something that everybody does.
We made a decision sort of that we weren’t going to live like that [00:13:00] anymore and now we have sewers and we have, we have a more robust waste disposal process in most parts of the world, right. What’s kind of the longer-term vision for how this set of technologies fits in to our economic and, you know, regulatory landscape in the future, understanding it’s not there today?
Rory Jacobson: Right. So, James, I’m going to speak from a government point of view. That we’ve achieved the Carbon Negative Shot, right? Like our portfolio of carbon dioxide removal solutions is at that hundred dollars per ton net CO₂ equivalent. That’s huge. I think one other piece that’s really important is international engagement, right? And so I hope that there is a broader global consortium of countries that are willing to invest in these technologies in the research and development side and the demonstration deployment side. But I hope that these technologies, 10, 20 years out, are at a place where we’re actually doing the work that integrated assessment models have told us that we should be doing. And [00:14:00] I love working with our analysis group at DOE. But what they tell us is that we need probably at least a gigaton of carbon dioxide removal by 2035, 2040, and then there on, by 2050, the U.S. should be contributing probably over a gigaton of carbon dioxide removal, year over year. But, a gigaton is massive, right? Like this is a tremendous amount.
I think the important piece that folks understand is that it’s a portfolio. Marine carbon dioxide removal, soil carbon sequestration, afforestation, reforestation, direct air capture, biomass with carbon removal and storage, creating energy products or just storing that biomass in a way that is durable. So, so we have an entire suite of tools; I can’t tell you what the distribution is going to be across them, but I do know that I’m pretty confident that we can get to that gigaton at least.
James Lawler: Yeah. I don’t know if there’s a clear answer to this or, or not, but where does the a hundred dollars a ton come from? Like in terms of setting that [00:15:00] number, does it come from any particular analysis that says, if we can get it to this, then it’s possible to pay for it through a series of mechanisms that is deemed to, to be acceptable in the future? Or, like, why isn’t it $200 or $50?
Rory Jacobson: Yeah, I think it’s a great question. So, if we look at domestic incentives to stop carbon pollution in the U.S., right, I think the 45Q tax credit is a great example. You’ve got $85 a ton, and that’s just below a hundred. So when you’re thinking about the opportunity cost of, should I just, just remove this, you know, at the flu stack and potentially, like, get this incentive to abate the emission, or should I think about, you know, the idea that a carbon dioxide removal technology should be the incentive instead, and again, I would reaffirm and clarify that the incentive for direct air capture exclusively is higher under 45Q. That’s $180 per ton.
The idea is that, you know, I think [00:16:00] $100 stops just short of most industries that are polluting today where they would reasonably intervene within their own supply chain to stop CO₂ from entering the atmosphere, right? At the point where we don’t need to do carbon removal. That’s the important piece, right? The idea that we hopefully don’t have to do as much carbon removal as we think we might have to.
James Lawler: Yeah. And so Rory, we did an episode a long time ago on what costs society pays, right? Through loss and damage and you know, et cetera, associated with climate change, and those studies that look into social cost of carbon put out a cost per ton, right, of CO₂ in terms of what the, what the cost is to society.
So if- right now the cost to remove at hundreds of dollars a ton is actually higher than most estimates of what the social cost of carbon is at maybe $200 a ton or between $100 and $200. And I know that at a certain point, federal procurement laws had a particular social cost of carbon associated with them, and [00:17:00] now I’m getting way out of my depth.
Rory Jacobson: I think that logically is the intervention point. Once we’ve crossed that threshold, it makes sense to reduce human suffering, and to benefit the planet by removing that CO₂. I think there are a bunch of questions about what those projects look like, where they are, and who funds them, how they operate, who gets to say whether or not they move forward, how long they exist. That’s where things, I think, get complicated.
James Lawler: Yeah, so speaking of what projects move forward, is there anything you can share on the $35 million procurement of carbon credits as far as the types of projects or sectors you’re working with?
Rory Jacobson: Even if you’re not a carbon dioxide removal wonk, I would encourage you to read the rules document, even the first couple of pages, because it will tell you a lot about how we as DOE think this market works. What we thought about really were the technologies that Congress told us to look at from day one, right?
And there are a couple of [00:18:00] different technology verticals that are included there, particularly the ones that are included in that purchasing effort, direct air capture engineered technologies that remove CO₂ that stores CO₂ either in products or in the geologic subsurface. We have biomass with carbon removal and storage, enhanced rock weathering. This one is wonky for a lot of folks: the idea that rocks can actually absorb CO₂ more quickly, they’re doing it every day. They’re doing it at the scale of billion tons a year. And then all of the other things that exist, right?
So like, ways to remove CO₂ from the upper ocean, the hydrosphere, and anything that we didn’t think of in, in those first three topics. I think that the most exciting piece of this is that Congress has given us, in our budget directive, another $20 million to run this program again. And so we’re gonna take all of the learnings from this first round and do this process over and hopefully much better, much more conducive to the industry where it is in a year or two.
James Lawler: Yeah, so in [00:19:00] this, in the description of this program on the DOE’s website, it says you’ve got up to 10 winners, $375,000 and up to 10 that could receive up to $3 million for their pilot project. What are you looking for these various applicants to actually produce for, let’s say, the $3 million? What, what does success look like for them?
Rory Jacobson: Yeah, I mean, it’s a great question. As a government thinking about prizes, you know, we want to have a couple of different tiers, right, of vetting and I think particularly technical diligence on these projects. Like, durable, additional, well verified, you know, scientifically rigorous carbon dioxide removal that the Department of Energy could purchase. And so that’s where $3 million really becomes an opportunity for those 10 leading entities to work with us to develop, functionally, what looks like a carbon dioxide removal purchasing agreement that explains everything from their measurement, monitoring, reporting, and verification [00:20:00] strategy to their verifier, to their strategy around long-term maintenance of permanence of the carbon dioxide that’s stored.
All of those pieces go into consideration there. And I think the other really important thing that I should have led with actually is community benefits plans. How does this actually impact the folks that are working on the project? Who are we hiring to deliver these tons? Who are the folks that are going to cohabitate with this project? How are they benefiting? All of those really important pieces I think are front and center to this prize.
James Lawler: If you want to check out the list of semifinalists, it’s linked in our transcript on our website at climatenow.com.
We have talked a few times about the DAC hubs and I don’t know if you could share a little bit on what the DAC hubs were, in case folks didn’t hear those episodes, and then maybe give us an update about where those various efforts stand today, what we can look forward to with, with the DAC hubs nationally.
Rory Jacobson: Yeah, absolutely. The Regional DAC Hubs [00:21:00] program was authorized and appropriated through the Infrastructure Law. So, we’ve got three and a half billion dollars going towards building DAC hubs that can sequester up to a million tons of CO₂ per project, per year, across four projects. And I think that DOE was so thoughtful with the rollout of this program. I think the first really important thoughtful thing that we, we did is feasibility studies, right?
Like, where could different DAC technologies be deployed, right? Like, how do different DAC technologies, direct air capture technologies, perform in different climates, with different use cases, with different energy sources? The second piece is front end engineering and design studies, FEED studies. We funded five of those as fossil energy and carbon management.
And this is a real detailed design stage where we look at a project and we, we lay out what materials do you need to procure? How many employees do you need? What does operation look [00:22:00] like? All of the pieces that go into actually building a project, including of course, the most important figure that we’ve been talking about. What is the levelized cost of carbon dioxide removal associated with that project?
There are 19 projects included within fossil energy and carbon management scopes there. Office of Clean Energy Demonstrations, our partner at DOE, has two other projects, one of which was actually just awarded $50 million, project Cypress. It is in Lake Charles, Louisiana, and I had the privilege of going down, actually walking the site and attending a community meeting, hearing the feedback from folks that will live around, work on that project potentially. And I think that we as DOE have a tremendous responsibility to engage with those folks and both articulate the opportunity associated with some of these technologies, but also to, to understand that it might not necessarily always be conducive to the immediate needs of every single stakeholder.
James Lawler: What can you tell us about the way that communities are responding [00:23:00] to the prospect of these projects? Like what, what are those conversations like, you know, on the ground around where these might be deployed?
Rory Jacobson: Yeah. For those folks that were, you know, well aware of what the CO₂ e meant, I would encourage you to read Celina Scott Buechler’s work recently published about how to do good community engagement, particularly in direct air capture. I think the piece is out in Nature now.
James Lawler: We’ll have that work linked in the transcript on our website.
Rory Jacobson: We have a lot of education to do. And I think that James, it boils down to the number of hours in a day, right? The average person works 8, 10 hours a day. They go home, they pick up their kids, they make a meal. And there isn’t a lot of time to read articles about what this nascent climate technology is and how it could benefit them. What they know are industries that have historically polluted.
That’s the challenge there, right? Is that direct air capture, it’s actually cleaning up, you know, greenhouse gases in the atmosphere. And it’s already a [00:24:00] huge ask to, to request that folks engage with us, right? To learn about this technology, to learn about the opportunity. We’ve yet to do a lot of really important work about how direct air capture could be coupled to technologies that also reduce other atmospheric pollutants. Things like PM2.5 and harmful atmospheric pollutants that do cause public health hazards, right?
What I will say is that we know that we need direct air capture to achieve our climate goals. And I think that there are a lot of important questions to ask project developers around what type of jobs, how long will they be around for, what do they look like, how much do they pay? Are you hiring locally? Like all, all of the questions that we as DOE would ask of a community benefits plan, that’s the opportunity I see in the near term. But I also think that DOE is very keen to engage the public about how to do better on those pieces, right?
James Lawler: Coming back to CDR and kind of the Voluntary Carbon Removal [00:25:00] Purchasing Challenge, can you talk about the response that you’ve had so far?
Rory Jacobson: You know, typically when we put out a notice of intent, the purpose of that is really to inform companies, universities, NGOs that might apply, that an opportunity is forthcoming. In this case, we saw support much earlier than that, actually. The day that we put this out, Google said we would happily match your commitment of CDR purchasing. I think that’s a phenomenal nod at, I hope, the work that the Department of Energy is doing in carbon dioxide removal purchasing. But also an exemplary effort to demonstrate that this is doable for companies, right?
DOE, like many small, you know, chief sustainability offices, is purchasing CDR and we’re doing this for the first time. We’re doing diligence on projects. We’re looking at different technologies and unlike those small companies, we have the ability to leverage our national labs, to leverage all the expertise [00:26:00] across, you know, the entire department of energy. And we hope that when we actually launch the challenge formally, that we get that same response from a whole bunch of other companies, but not just, you know, the Googles of the world, but also folks that might have been hesitant to engage with something like a carbon dioxide removal credits.
When you’re sort of already a sustainability leader in your fields, and you have that opportunity where you have a little bit of budget expenditure to allocate towards carbon dioxide removal credits, what are the best opportunities to do that? That’s where DOE can demonstrate, you know, a list of companies that we think are promising or suppliers that we think are promising. And then give some transparency to the market. At what volume are folks doing this? How are they allocating it within their scope one through three? Over what duration are they making these sorts of deals? All of those components that have been missing from this market in terms of transparency.
James Lawler: Right. It sounds like you would envision at some point there being a website, which might be a government or DOE site, that would track as much as possible the [00:27:00] market for carbon dioxide removal credits. And like, who’s buying what against, you know, from what projects.
Rory Jacobson: We intend for that to exist. I think that’s the clearest that I can articulate that as clear as possible. And I think the other point that I haven’t talked about is standards, methodologies, like how are we actually doing the quantification of carbon dioxide removal and who’s doing that verification? How do we know that they’re unbiased, right? And, and how are they doing their reporting? I think those are huge pieces of this and an important component of transparency in the market.
James Lawler: Yeah. So there are various companies that have established protocols for assessing the, the quality of carbon removal projects. And, there are rating systems now, that have been developed that will rate a project across dimensions like permanence, additionality. So to what degree do you expect, Rory, that DOE will piggyback off of efforts that have already been described publicly, versus develop your own methodology to do this?
Rory Jacobson: So, I mean, maybe the place where I’ll start is that in [00:28:00] our carbon dioxide removal purchase pilot prize rolls, we do lay out criteria, right? And we want to be very transparent about that. Like, here’s what we think a good credit looks like. And I think importantly, we don’t use the term offset, right? But in the near term, I think it’s unlikely that we actually specify what a company needs to do to be, a CDR supplier to the Department of Energy, short of the criteria that we’ve already listed.
James Lawler: Got it. Got it. What does success look like for, for you? I mean, as, as you’ve defined it internally around this challenge?
Rory Jacobson: Yeah, I mean, I think that, I think success looks like gravitating towards this high-quality market, right? And I think we’ve seen leadership from coalitions in the private sector point us in this direction. And I hope that some government guidance and in-government purchasing can help with that. And I would like to see dollars directed there as opposed to, you know, other sorts of offset claims that have less rigor, [00:29:00] have less scientific backing.
And I think the really important piece, James, we are going to have to deal with and, you know, future generations will have to deal with, is, is the monitoring piece, right? To know that that carbon remains sequestered, which is again, a whole other episode.
James Lawler: Awesome. Well, Rory, thank you so much for joining us. I really appreciate you spending all this time with us. Thank you.
Rory Jacobson: No doubt, James. Great to finally meet you.
James Lawler: Yeah, you too.
That’s it for this episode of Climate Now with the Department of Energy’s Rory Jacobson. Thanks for tuning in. If you’d like to learn more about today’s conversation, visit our website, climatenow.com, where we always upload source transcripts of our episodes. If you have any questions about this episode, or if you know someone who you think would make a great guest, feel free to email us at contact@climatenow.com. Thanks for tuning in!
