DOE Restores $1.2B for DAC Hubs and 5 Hydrogen Projects

The U.S. Department of Energy confirmed it will retain funding for two of America's largest direct air capture hubs and five regional hydrogen hubs. The decision reverses months of uncertainty that followed a wave of clean energy grant cancellations in fall 2025. Federal commitment to carbon removal and hydrogen infrastructure is back on firm ground.

This week, the DOE sent a roughly 39-page list of preserved awards to members of the House Appropriations Committee. The list covers nearly 2,000 grants that cleared the agency's review of Biden-era awards, according to reporting by Bloomberg and Latitude Media.

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Which Projects Made the Retained List?

The two flagship DAC hubs that cleared the DOE review are Project Cypress in Louisiana and the South Texas DAC Hub in Kleberg County, Texas.

Project Cypress is a partnership led by Battelle, with direct air capture technology provided by Climeworks and Heirloom. The hub is sited in Calcasieu Parish, Louisiana, and uses Gulf Coast Sequestration for underground CO2 storage. It was awarded an initial $50 million from the DOE's Office of Clean Energy Demonstrations in March 2024. Project Cypress is eligible for up to $600 million in total matched federal investment.

The South Texas DAC Hub is developed by 1PointFive, a wholly owned subsidiary of Occidental, on 106,000 acres at King Ranch in Kleberg County. It uses technology from Carbon Engineering. The initial DOE award of $50 million was made in September 2024, with a total DOE commitment of up to $500 million for the initial facility, and a potential increase to up to $650 million for expanded regional carbon network development.

On the hydrogen side, the DOE list covers almost $5 billion in previously awarded funding for five regional hubs. Those five are the HyVelocity H2Hub (Gulf Coast, Texas), the Appalachian Hydrogen Hub or ARCH2 (West Virginia, Ohio, and Pennsylvania), the Midwest Alliance for Clean Hydrogen or MachH2 (Illinois, Indiana, and Michigan), the Mid-Atlantic Clean Hydrogen Hub or MACH2 (Pennsylvania, Delaware, and New Jersey), and the Heartland Hydrogen Hub (Minnesota, North Dakota, and South Dakota). The hubs are backed by companies including Exxon Mobil Corp., Exelon Corp., Chevron Corp., EQT Corp., and Bloom Energy Corp.

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How Did These Projects End Up at Risk?

In October 2025, the DOE terminated funding for at least 10 of the original 21 DAC hub projects. Within days, both the Louisiana and Texas flagship hubs appeared on a leaked list of additional projects targeted for cancellation. The companies never received formal termination letters, but the uncertainty stretched for months.

A broader wave of cancellations in fall 2025 put roughly $12 billion in clean energy projects at risk. The hydrogen program also took hits: both the California Hydrogen Hub (ARCHES) and the Pacific Northwest Hydrogen Hub lost their DOE funding. Those two hubs had been designed to produce green hydrogen using renewable power and had inked financial agreements with the Biden administration. They remain terminated and do not appear on the preserved list.

A federal lawsuit added a parallel track. The City of St. Paul led a legal challenge against the DOE's cancellations. A judge ruled that the DOE's October 2025 termination of over 200 clean energy grants violated the Constitution. Seven projects that stemmed from that suit received official reinstatement notices in spring 2026. Most of those are separate from the new preserved list sent to Congress.

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What Scale of Carbon Removal Do These Hubs Target?

Project Cypress is designed to remove 1 million metric tons of CO2 per year when fully operational, targeting that milestone by 2030 (Battelle, March 2024). To put that in context, the two hubs were selected in 2023 as part of a DOE program specifically requiring each hub to reach at least 1 million metric tons of annual capture capacity.

The South Texas DAC Hub has an initial design capacity of 500,000 metric tons of CO2 per year, with a build-out plan to exceed 1 million metric tons annually (1PointFive, September 2024). The site's long-term potential reaches up to 30 million metric tons of CO2 removal per year, supported by an estimated storage capacity of 3 billion metric tons in saline formations beneath the 106,000-acre King Ranch site.

For scale: global DAC capacity across all operating facilities currently stands at under 50,000 metric tons of CO2 per year. The two retained hubs together represent a leap of roughly 20 to 40 times that total once they reach initial operational targets.

Project	Location	Lead / Key Partners	DOE Award	Initial Capture Target
Project Cypress	Calcasieu Parish, Louisiana	Battelle (lead), Climeworks, Heirloom	Up to $600M	1M metric tons CO2/year
South Texas DAC Hub	Kleberg County, Texas	1PointFive / Occidental, Carbon Engineering	Up to $500M	500K, scaling to 1M+ metric tons CO2/year
HyVelocity H2Hub	Gulf Coast, Texas	Chevron Corp. (among others)	Up to $1.2B	Blue hydrogen + CCS; heavy-duty transportation
ARCH2 (Appalachian Hub)	WV, Ohio, Pennsylvania	EQT Corp. (among others)	Up to $925M	Blue hydrogen production with CCS
MachH2 (Midwest Hub)	Illinois, Indiana, Michigan	Bloom Energy Corp. (among others)	Up to $1B	Industrial decarbonization; steel, refining
MACH2 (Mid-Atlantic Hub)	PA, Delaware, New Jersey	Exelon Corp. (among others)	Up to $750M	Heavy-duty transportation; repurposed energy infrastructure
Heartland Hydrogen Hub	MN, ND, South Dakota	EERC / Univ. of North Dakota (lead)	Up to $925M	Agricultural decarbonization; fertilizer production

How Do Hydrogen Hubs Fit This Broader Reversal?

The five retained hydrogen hubs were part of a $7 billion commitment the DOE made in late 2023 under the Bipartisan Infrastructure Law. The DOE originally selected seven regional hubs. The two that remain terminated — ARCHES in California and the Pacific Northwest H2Hub — were both designed around green hydrogen using renewable power.

The five hubs that cleared the review include a mix of blue hydrogen production with carbon capture and storage, industrial hydrogen applications, and fuel cell deployment. Blue hydrogen, produced from natural gas using carbon capture, is central to hubs like HyVelocity and ARCH2. This approach fits with the current DOE direction of treating hydrogen and carbon capture and storage as complementary technologies rather than competing priorities.

The HyVelocity H2Hub in Texas received an initial $22 million of its $1.2 billion federal cost share in late 2024, according to DOE documentation. ARCH2 received $30 million of its $925 million award for Phase 1 activities. Both were among the first hubs to receive initial Phase 1 disbursements.

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What Happens Next for These Projects?

The DOE confirmed the preserved list but has not disclosed how individual awards will be structured going forward. Energy Secretary Chris Wright has indicated that some projects on the retained list were modified as a condition of preservation, but has not specified which ones or what changes apply to the DAC hubs.

For Project Cypress, Battelle confirmed to Heatmap News that the DOE project team is actively engaged with oversight of the award proceeding. Neither Battelle nor its partners have confirmed whether the original award scope has changed. The preserved list shows each DAC hub at the $50 million obligated amount, but the DOE's FY2027 budget request — which proposes rescinding $2.3 billion from the original $3.5 billion DAC Hubs program — would leave the full $1.2 billion earmarked for both hubs intact.

Aiyer confirmed that funding for Project Cypress has been retained by the DOE following a rigorous review.

Global DAC capacity sits at under 50,000 metric tons per year across all currently operating facilities. Project Cypress alone targets 20 times that figure at initial operation. The South Texas hub targets the same 1 million metric ton threshold at full build-out, with a long-term site potential of up to 30 million metric tons per year. Securing these two hubs keeps that scale of carbon removal in North America on the table. The next test is whether preserved funding translates into construction milestones.