Notice of Intent Regarding Launching a Voluntary Carbon Dioxide Removal Purchasing Challenge; DOE Carbon Dioxide Removal Purchasing (CO2RP) Challenge
| Published date | 14 March 2024 |
| Record Number | 2024-05269 |
| Citation | 89 FR 18626 |
| Court | Energy Department |
| Section | Notices |
Federal Register, Volume 89 Issue 51 (Thursday, March 14, 2024)
[Federal Register Volume 89, Number 51 (Thursday, March 14, 2024)]
[Notices]
[Pages 18626-18629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05269]
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DEPARTMENT OF ENERGY
Notice of Intent Regarding Launching a Voluntary Carbon Dioxide
Removal Purchasing Challenge; DOE Carbon Dioxide Removal Purchasing
(CO2RP) Challenge
AGENCY: Office of Fossil Energy and Carbon Management, Department of
Energy.
ACTION: Notice of intent.
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SUMMARY: The Department of Energy (DOE or the Department), Office of
Fossil Energy and Carbon Management (FECM) is issuing this Notice of
Intent (NOI) to notify interested parties of its intent to launch a
Voluntary Carbon Dioxide (CO2) Removal Purchasing
(CO2RP) Challenge. The CO2RP Challenge will call
on other organizations to purchase small and growing quantities of
high-quality, permanent CO2 Removal (CDR) credits. The
CO2RP Challenge will operate in coordination with DOE's
Carbon Dioxide Removal Purchase Pilot Prize (CDR Purchase Prize),
through which the Department will award up to $30,000,000 across ten
prize winners that successfully deliver their committed CDR credits. In
addition, the Challenge will invite CDR suppliers that were not
selected for or did not apply to the DOE CDR Purchase Prize to seek
designation as a ``next wave'' supplier that demonstrates promise for
other future DOE or private sector CDR credit purchasing efforts. CDR
credit suppliers participating in the CO2RP Challenge
through pursuit of designation within DOE's list of ``next wave'' CDR
credit providers will submit CDR credit proposals to DOE for review.
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DATES: Written comments are requested by May 15, 2024.
ADDRESSES: Interested parties may submit comments electronically to
[email protected] and include ``Voluntary CDR Purchasing
Challenge'' in the subject line. Responses must be provided as
attachments to an email. Only electronic responses will be accepted.
FOR FURTHER INFORMATION CONTACT: Questions may be directed to Rory
Jacobson, Acting Division Director for Carbon Dioxide Removal,
[email protected] or (202)-586-1650.
SUPPLEMENTARY INFORMATION:
I. Background
Large-scale carbon dioxide removal (``CDR'') is critical to reach
net-zero targets by 2050 and is anticipated to serve an important role
as a counterbalance for hard to abate sectors and a mechanism to reduce
atmospheric carbon dioxide. The US Long Term Strategy \1\ expects that
at least 100 million tonnes of technological CDR (in addition to land
use, land use change, and forestry (LULUCF) approaches) will be
required for the US to achieve net-zero by 2050. Leading analyses by
scientific bodies like the Intergovernmental Panel on Climate Change
(IPCC) and the National Academies of Sciences (NAS) anticipate that CDR
will be needed at least at the gigatonne scale by mid-century to
deliver on the Paris Agreement goals.\2\ While these analyses
collectively make clear that reducing emissions directly (i.e., without
carbon credit purchases) is the primary long-term strategy for climate
mitigation, in the vast majority of cases, CDR is essential as a
complement to these efforts to avoid exceeding committed emissions
targets and accelerate the pace of mitigation.
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\1\ The Long-Term Strategy of the United States: Pathways to
Net-Zero Greenhouse Gas Emissions by 2050, US Department of State
and Executive Office of the President, (November 2021), https://www.whitehouse.gov/wp-content/uploads/2021/10/US-Long-Term-Strategy.pdf.
\2\ Negative Emissions Technologies and Reliable Sequestration:
A Research Agenda (2019), National Academies of Sciences,
Engineering, and Medicine, https://doi.org/10.17226/25259.
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Currently, CDR pathways across the DOE portfolio are at varying
levels of technical maturity and few pathways have been commercially
demonstrated. Further, while a diverse portfolio of CDR approaches
holds significant promise towards delivering on the United States'
Long-Term Strategy, these pathways face common challenges to achieve
scale, including factors like (1) cost, (2) measurement, reporting, and
verification (``MRV''), and (3) resource constraints. For this reason,
DOE announced a ``Carbon Negative Shot'' initiative at the 2021 United
Nations Climate Change Conference (commonly referred to as COP26),
aimed at catalyzing innovation across a portfolio of approaches to
enable gigatonne-scale CDR at less than $100 per tonne CO2e
net removed for at minimum 100 years, inclusive of MRV, within a
decade.\3\ In addition to piloting an extensive portfolio of CDR
pathways, advancing and establishing MRV best practices and guidance,
and investing in research and development to support supply (``push''),
DOE is exploring opportunities to establish workable demand (``pull'')
incentive mechanisms.
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\3\ On September 29, 2023, the U.S. Department of Energy's (DOE)
Office of Fossil energy and Carbon Management (FECM) announced up to
$35 million to advance technologies that permanently remove carbon
dioxide from the atmosphere. See, Carbon Dioxide Removal Purchase
Pilot Prize, Office of Fossil Energy and Carbon Management,
(September 29, 2023), https://www.energy.gov/fecm/carbon-dioxide-removal-purchase-pilot-prize.
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On August 10, 2023, the DOE and the National Energy Technology
Laboratory (NETL) published a Notice of Intent (DE-FOA-0003081) to
issue Funding Opportunity Announcement No. DE-FOA-0003082, titled
Carbon Negative Shot Pilots, and Other Funding Opportunities.\4\ These
intended funding opportunities included a Carbon Negative Shot Pilots
FOA (DE-FOA-0003082), a Direct Air Capture (DAC) Commercial Pilot
Prize, and a CDR Purchase Prize.
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\4\ Notice of Intent to Issue Funding Opportunity: Carbon
Negative Shot Pilots, Office of Fossil Energy and Carbon Management,
(August 11, 2023), https://www.energy.gov/fecm/notice-intent-issue-funding-opportunity-carbon-negative-shot-pilots.
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Launched on September 29, 2023, the CDR Purchase Prize is a
historic, first-of-a-kind government purchasing program for permanent
CDR credit purchasing.\5\ The CDR Purchase Prize follows in the
footsteps of private businesses and coalitions that have shown how
relatively small-scale purchases of CDR credits can have an outsized
impact on catalyzing technology innovation and the advancement of
standards for robust MRV and carbon accounting.
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\5\ DOE Announces $35 Million to Accelerate Carbon Dioxide
Removal, Office of Fossil Energy and Carbon Management, (September
29, 2023). https://www.energy.gov/fecm/articles/doe-announces-35-million-accelerate-carbon-dioxide-removal.
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The CDR Purchase Prize will award up to $35M of CDR credit
purchases, across four CDR areas of interest: (1) direct air capture
(DAC), (2) enhanced CO2 mineralization, (3) biomass carbon
removal with storage (BiCRS), and 4) other planned and managed carbon
sinks with secure geological storage or equivalent. The first-round
application for the program closed on December 14, 2023. In spring
2024, DOE will announce up to 25 semifinalists that have submitted the
highest quality CDR Credit Concept Proposals for how they plan to
deliver independently verified, high-quality CDR credits to the US
government with secure geological or equivalent storage. DOE will then
release the final rules for how semifinalists will be evaluated and
selected to secure one of the 10 finalists awards, which will provide
finalists up to $3M upon delivery of their verified CDR credits. DOE's
CDR Purchase Prize is designed to catalyze further voluntary CDR credit
purchases in several ways, including:
Supplier transparency for prospective CDR credit
purchasers: DOE and the National Labs will conduct rigorous technical
diligence on all applicants, and our pool of semi-finalists will offer
a portfolio of CDR project developers with a high chance of delivering
robust CDR credits in the near future.
Purchase contract norms: DOE will set norms for what
qualifies as high-quality CDR credits, and what MRV methods and broader
delivery terms are appropriate for CDR credit purchasing, including
efforts such as publishing model CDR credit purchasing templates and
term sheets for private buyers to use as a starting point for their own
purchases.
Motivation for further action: DOE's initiative is
designed to show the importance and urgency of purchasing CDR credits
today, so that governments and businesses alike invest more resources
in CDR now. In addition, the CDR Purchase Prize is designed to
challenge CDR suppliers to sign up as many new private purchasers as
they can by including the number of external purchase commitments as
part of the selection criteria for from the semifinals to the finals.
This will simultaneously enable DOE to amplify the demand for high-
quality CDR credits with the greatest scalability and demand, while
also providing potential CDR credit purchasers in the private sector
with a short list of projects that have successfully undergone initial
DOE assessment.
Enhancing CDR credit demand integrity: DOE will model how
CDR credit purchasing organizations can account for credit purchases
and retirements transparently and with the
[[Page 18628]]
care needed to ensure that credits do not substitute for emissions
reductions.\6\
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\6\ All CO2RP Challenge participants will be
encouraged to adopt the position--consistent with DOE's position--
that CDR is best viewed as part of a decarbonization portfolio that
first achieves maximum emissions reductions from existing sources.
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DOE recognizes that the CDR Purchase Prize alone is insufficient to
catalyze the marketplace for CDR credits. Even with the selection
criteria encouraging semifinalists to secure as many purchases as
possible, DOE recognizes that the pool of CDR credit purchasers must be
significantly larger than at present for the industry to scale
successfully. CDR is likely to be essential for many organizations to
meet net-zero goals, yet only a few dozen organizations have purchased
permanent CDR credits to date. This means that potentially thousands of
additional organizations that have committed to net-zero climate
targets will need to start buying permanent CDR credits at small and
growing scales today. If organizations fail to begin purchasing CDR
today, the field will fail to scale CDR supply as quickly as needed,
and CDR solutions will not be available at the cost, scale, or with the
necessary MRV standards and community safeguards needed to achieve net
zero targets. Furthermore, regulators and civil society groups have
indicated that permanent CDR can represent an especially high integrity
approach for carbon credits to meet disclosures or other regulations
around carbon credit and net-zero claims. Organizations that build out
permanent CDR portfolios today may attain advantages in the context of
any future carbon-related regulatory compliance regimes.
Yet despite the imperative for voluntary CDR credit purchases
today, several factors are inhibiting the growth of voluntary CDR
credit markets, including:
1. Insufficient incentives: Companies have no requirement to
purchase CDR credits as part of their climate plans, which is
compounded by a lack of clear and consistent direction by civil society
groups working on corporate climate disclosure and action on the
appropriate role for these credits in near-term decarbonization
activities. Government subsidies for CDR projects have grown in recent
years but remain far below levels needed to catalyze widespread
adoption.
2. High prices: CDR credits are more expensive than emission
reduction credits, with engineered CDR credits selling for between
$200-1,000 per tonne CO2e net removed. These prices can
represent an approximately 50-250x premium of average emissions
reductions credits. Existing subsidies are insufficient to close the
gap between the prices buyers are willing to pay, and the funding
needed to scale CDR technologies.
3. Complicated procurement: There is currently limited expertise
among most corporate carbon credit purchasers on how to evaluate carbon
removal companies and MRV protocols, and to design procurement
agreements that are fair for all parties and bankable for suppliers.
4. Voluntary carbon markets (VCMs) challenges: VCMs remain
relatively small and face challenges related to market transparency and
credit integrity. However, high-integrity VCMs represent potentially
important channels for unlocking significant capital for climate-
impactful investments that can help limit the increase in the global
average temperature to 1.5 [deg]C. Additional action is needed by civil
society, the private sector, and governments to address relevant
challenges and enable conditions for high-integrity VCMs to grow.
II. Voluntary Carbon Dioxide Removal Purchasing Challenge
To further support the CDR credit purchasing market, DOE intends to
launch a two-pronged CO2 Removal Purchasers Challenge
(``CO2RP Challenge''). By engaging with both CDR credit
buyers and suppliers, the DOE CO2RP Challenge will enhance
market transparency and bolster the quality and integrity of CDR credit
supply, to accelerate, improve, and scale the CDR credit market.
a. Credit Buyers
DOE will ask for any organization or government that discloses its
GHG inventory to join the ``CO2RP Challenge'' by purchasing
a small and growing volume of permanent CDR. To join the Challenge, an
organization will be required to:
Purchase and retire permanent CDR annually, aligned with
the requirements and assessment criteria of DOE's purchases, starting
no later than 2025.
Disclose to DOE every associated CDR purchase, which will
maintain a public inventory of:
[cir] CDR credit purchasing entity;
[cir] CDR credit supplier entity;
[cir] CDR project delivering credits;
[cir] CDR crediting methodology, protocol, or standard (inclusive
of MRV); and
[cir] Date verified of CDR credit volume delivered and retired.
Require but kept private:
[cir] price paid per tonne of CDR.
Disclose to the public:
[cir] Transparent accounting of CDR and any other forms of carbon
credits separately from activities that directly reduce emissions in
their supply chains in any annual climate related disclosures.
Participation in the CO2RP Challenge will not preclude
CDR buyers from participating in other buyer coalitions or coordinated
funding initiatives. The Challenge is intended to consolidate CDR
credit purchasing efforts across private organizations that align with
DOE's Carbon Negative Shot implementation strategy. The Challenge will
not require CDR credit buyers to purchase a minimum volume; however, it
is anticipated DOE may issue guidance or resources to help
organizations incorporate CDR appropriately into their greenhouse gas
inventories and net-zero strategies.\7\
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\7\ DOE anticipates issuing more detailed guidance regarding
eligible and appropriate Scope 1-3 greenhouse gas accounting and
attribution of CDR credit purchases, as well as clear guidelines
prioritizing direct emissions reductions at the greatest pace and
scale feasible. For more information on Scope 1-3 greenhouse gas
accounting, please see EPA Greenhouse Gas Inventory Guidance for
Scope 1 and 2, and (https://www.epa.gov/climateleadership/scope-1-and-scope-2-inventory-guidance) Scope 3 (https://www.epa.gov/climateleadership/scope-3-inventory-guidance).
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b. CDR Credit Suppliers
DOE will encourage additional CDR credit suppliers to join the
CO2RP Challenge by offering to evaluate a new round of
credits using the process implemented in Phase 1 of the CDR Purchase
Prize. This component of the CO2RP Challenge is intended to
identify CDR credit suppliers that may have been too early to apply to
the CDR Purchase Prize but are likely to have strong technical and
commercial viability. While no new funding will be available for this
effort to suppliers, DOE will and publish a list of ``next wave''
applications across the four area \8\ of interest categories outlined
in the CDR Purchase Prize from:
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\8\ Please consult the Official Rules document for the CDR
Purchase Pilot prize for detailed descriptions of eligible CDR
pathways. See: https://www.herox.com/DAC-commercial.
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Organizations that were not selected to participate in the
semifinalist pool for the CDR Purchase Prize but have significantly
updated and advanced their credit offering with new project design,
MRV, or project offerings.
Organizations offering credits from projects that did not
apply or were not eligible for the CDR Purchase Prize but
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anticipate selling voluntary credits within the next calendar year.
Response Guidelines
NOI responses shall include:
1. NOI/RFI title and reference number;
2. Name(s), phone number(s), and email address(es) for the
principal point(s) of contact;
3. Institution or organization affiliation and postal address; and
4. Comments and recommendations regarding the intended structure,
objectives, and implementation of the DOE Carbon Dioxide Removal
Purchasing (CO2RP) Challenge as proposed within this NOI.
Confidential Business Information
Pursuant to 10 CFR 1004.11, any person submitting information that
he or she believes to be confidential and exempt by law from public
disclosure should submit via email two well-marked copies: One copy of
the document marked ``confidential'' including all the information
believed to be confidential, and one copy of the document marked ``non-
confidential'' with the information believed to be confidential
deleted. Submit these documents via email. DOE will make its own
determination about the confidential status of the information and
treat it according to its determination.
Signing Authority
This document of the Department of Energy was signed on March 7,
2024, by Dr. Jennifer Wilcox, Acting Assistant Secretary, Office of
Fossil Energy and Carbon Management, pursuant to delegated authority
from the Secretary of Energy. That document with the original signature
and date is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on March 7, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2024-05269 Filed 3-13-24; 8:45 am]
BILLING CODE 6450-01-P
