US pulls billions from CCUS, decarbonisation projects: ‘major step backwards’

The Trump administration has announced the termination of US$3.7 billion of federal grants for 24 carbon capture and decarbonisation projects that had been approved under the Biden presidency.

The announcement was made by Energy Secretary Chris Wright last week, specifying that the projects “primarily include” funding for carbon capture and sequestration (CCS) and decarbonisation initiatives. 

According to reports, the scrapped carbon capture grants include nearly US$332 million to a project at Exxon Mobil's Baytown, Texas refinery complex, US$500 million to Heidelberg Materials and US$375 million to Eastman Chemical Company in Longview, Texas.

‘A worst-case scenario’

The cancellation was criticised as “a major step backward in the nationwide deployment of carbon management technologies” by the Carbon Capture Coalition, a nonpartisan collaboration of more than 100 companies, labour unions, and conservation and environmental policy organisations seeking to advance carbon capture technology in the US.

“Federal investments have ‘multiplier’ effects. DOE itself estimated that carbon management projects have an economic multiplier between 2x and 4x, meaning that every dollar invested by the American taxpayer, can lead to up to US$4 in economic output through additional supply and material orders, job creation, and broader economic benefits to regional economies. Already, the more than 270 publicly announced carbon management projects across the nation have resulted in more than US$77.5 billion in capital expenditures,” said Executive Director Jessie Stolark.

“With DOE canceling these projects, we are instead faced with a worst-case scenario in which the American taxpayer and businesses have invested billions without any results,” she added.

Potentially lost carbon capture potential

The projects reportedly defunded are all industrial-scale carbon capture: ExxonMobil’s Baytown project expects to produce up to 1 billion cubic feet of hydrogen made from natural gas per day, while capturing 98% of the associated CO2 – one of the world’s largest low-carbon hydrogen facilities.

For Heidelberg Materials, the US$500 million funding approved in March 2024 would have helped to capture approximately 2 million tonnes of CO2 from the company’s cement plant in Mitchell, Indiana every year from 2030.

“DOE found that these projects failed to advance the energy needs of the American people, were not economically viable and would not generate a positive return on investment of taxpayer dollars,” the Department of Energy said on its website.

The affected companies are yet to comment on how the lost funding will impact the projects.