1PointFive, the Direct Air Capture (DAC)-focused subsidiary of energy giant Occidental (Oxy), announced Thursday that it has been awarded up to $500 million in funding from the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED), supporting the development of a large-scale DAC hub in Southern Texas.

DAC technology, listed by the IEA as a key carbon removal option in the transition to a net-zero energy system, extracts CO2 directly from the atmosphere for use as a raw material or permanently removed when combined with storage. According to an Intergovernmental Panel on Climate Change (IPCC) climate change mitigation study, scenarios that limit warming to 1.5°C include carbon dioxide removal methods scaling to billions of tons of removal annually over the coming decades, with DAC positioned to potentially account for a significant portion of the total.

1PointFive is currently developing its South Texas DAC Hub, located on the King Ranch in Kleberg County, Texas, which will host DAC facility with an initial annual removal capacity of 500,000 metric tons of CO2, with plans to expand in the future to over 1 million tons per year. The South Texas site has the capacity to expand to up to 30 million tons of carbon removal per year – the equivalent of removing more than 6.6 million gasoline-powered vehicles each year – and to securely store up to 3 billion metric tons of CO2.

The award follows the announcement last year by the DOE that the 1PointFive Hub and a Louisiana-based DAC project by partners Battelle, Climeworks Corporation, and Heirloom Carbon Technologies, had been selected to receive grants totalling up to $1.2 billion, as part of a $3.5 billion Bipartisan Infrastructure Law-funded program to develop a series of U.S. DAC hubs to help jumpstart the DAC industry and support the achievement of the U.S.’ net zero greenhouse gas emissions by 2050 goal.

Under the new funding agreement, 1PointFive will be awarded an initial $50 million to advance its ongoing work at the SouthTexas DAC hub, with upcoming activities including engineering, permitting, procurement of long-lead equipment and community engagement, with up to $00 million to be awarded for the initial DAC facility at the site. 1PointFive added that the award value may be increased to up to $650 million for the development of an expanded regional carbon network in South Texas.

Occidental President and CEO Vicki Hollub said:

“Large-scale Direct Air Capture is one of the most important technologies that will help organizations and society achieve their net zero goals. This award demonstrates how the U.S. Department of Energy is committed to realizing the full potential of DAC and its confidence in the South Texas DAC Hub to deliver CO2 removal at a climate-relevant scale.”