States Drive Direct Air Capture Forward as Markets Mature

The US direct air capture industry is entering a pivotal transition phase. While federal investments over the past five years built a foundation with over 100 DAC projects and helped grow the sector from just a handful of companies to approximately 150 today, states are now stepping forward with targeted strategies that align DAC deployment with their unique resources and climate goals.

This shift reflects the natural evolution from research-heavy federal backing to state-driven market integration. Rather than signaling decline, it represents the industry's maturation as states recognize DAC's potential to support their net-zero ambitions while creating economic opportunities.

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Federal Foundation Sets Stage for State Leadership

Federal policies through the Bipartisan Infrastructure Law and Inflation Reduction Act provided crucial early support for DAC technologies. The 45Q tax credit now offers up to $180 per ton of CO₂ for DAC projects, while the regional DAC hubs program allocated $3.5 billion through fiscal year 2026.

This federal investment created critical technology diversification, enabling DAC systems ranging from fully electric to those requiring various thermal energy inputs. More than half of the world's DAC companies are now headquartered in the United States, positioning the country as the global leader in this emerging sector.

California Pioneers Comprehensive CDR Framework

California leads the charge with the most ambitious state-level carbon removal program in the nation. The state's approach combines abundant natural resources with groundbreaking policy innovation.

Resource Advantages

California's Imperial Valley offers some of the country's most significant geothermal resources, ideal for DAC systems requiring heat inputs between 70-150°C. The state also boasts substantial concentrated solar thermal potential, creating multiple pathways for low-carbon DAC deployment.

The CarbonSAFE project near Modoc Plateau provides CO₂ storage in basalt formations, while ultramafic rocks in the Sierra Nevada foothills offer mineralization opportunities for smaller-scale carbon storage.

Policy Innovation

California's SB 643, passed in September 2025, established the nation's first $50 million competitive grant program specifically for carbon dioxide removal. The state has set explicit quantitative targets: 7 million tonnes of CO₂ annually by 2030 and 75 million tonnes annually by 2045.

DAC is integrated into California's Low Carbon Fuel Standard (LCFS), creating market incentives for transportation fuel carbon intensity reductions. While the state maintains a moratorium on new CO₂ pipeline permits pending updated federal safety standards, this cautious approach ensures responsible deployment through alternative transport methods like rail.

Texas Leverages Energy Leadership

Texas brings unparalleled energy resources and infrastructure to DAC deployment. The state's diverse energy portfolio supports multiple DAC technology pathways simultaneously.

With renewables representing nearly 30% of total electricity generation and significant renewable curtailment (5% of wind and 9% of solar in 2022), Texas offers abundant low-carbon power for electric DAC systems. High-temperature DAC systems can access renewable natural gas, while data center waste heat provides opportunities for lower-temperature applications.

World-Class Projects

Two of the world's largest DAC projects are advancing in Texas:

1. Stratos DAC project in west Texas
2. South Texas DAC hub (federally funded)

The state's well-developed CO₂ transport and storage infrastructure, including Class VI wells and CarbonSAFE projects, provides essential enabling infrastructure. Texas is pursuing EPA primacy for Class VI wells and has established a permitting framework for CO₂ storage.

Existing business incentives, including property tax abatements and company grants for investment and job creation, can readily support DAC deployment without requiring new policy frameworks.

Washington's Clean Energy Advantage

Washington state combines exceptionally clean electricity with unique storage and transport opportunities. With one of the highest shares of low-carbon electricity in the United States, primarily from hydropower, the state offers very low grid-carbon intensity for electric DAC systems.

The Columbia River basalt formations provide significant geologic storage potential, validated by successful 2013-2015 demonstration projects. An active CarbonSAFE project is accelerating commercial CO₂ storage development near the Columbia River.

Innovative Transport Solutions

The Columbia River enables CO₂ transport via barge, offering an alternative to pipeline infrastructure that can face permitting delays and community opposition. Washington's sole nuclear power plant, planning capacity expansion upstream from the CarbonSAFE project, presents opportunities for medium-temperature DAC systems to utilize nuclear waste heat.

The state has set ambitious climate targets: 100% greenhouse gas emissions-free electricity by 2045 and 95% economy-wide emissions reduction below 1990 levels by 2050. State government has already published recommendations for increasing Washington's CDR capacity.

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Massachusetts Pioneers Innovation Ecosystem

While Massachusetts may not seem ideal for large-scale DAC deployment due to limited in-state geology for CO₂ storage, the state excels as a testing ground for advanced DAC technologies and utilization pathways.

The state imports significant low-carbon hydropower from Canada, achieving approximately 50% low-carbon electricity consumption despite 63% natural gas generation in-state. Ambitious offshore wind projects and over 4,300 MW of installed solar capacity continue grid decarbonization.

Waste Heat Innovation

Massachusetts hosts significant data center clusters generating substantial low-grade waste heat (25-60°C). The state is among eight exploring policies for thermal energy networks to harness data center heat, with the Massachusetts Green High Performance Computing Center in Holyoke drawing over 90% clean power.

Two key 2024 legislation pieces advanced DAC support:

• H.5100: Added CDR to clean energy project definitions for state climatetech grants
• S.2967: Directed agencies to develop CDR policy recommendations and established embodied-carbon procurement standards

Technology Diversity Enables Widespread Deployment

The DAC industry's technological diversification creates deployment opportunities across different resource profiles and regional characteristics. This variety allows states to match DAC technologies with their available resources.

DAC Technology Categories by Energy Requirements

Technology Type	Temperature Range	Energy Sources
100% Electric	Ambient-Moderate	Grid/renewable electricity only
Low-Quality Heat + Electric	70-150°C	Geothermal, solar thermal, nuclear
Medium-Quality Heat + Electric	150-300°C	Enhanced geothermal, advanced nuclear
High-Quality Heat + Electric	300-900+°C	Concentrated solar, advanced nuclear, RNG

Each technology category has received federal support across various development stages, with most funding focused on systems requiring 70-150°C heat combined with electricity. This diversity enables states to leverage their unique resource advantages.

Market Integration Accelerates Industry Growth

The transition from federal research focus to state-driven deployment creates opportunities for market integration and private investment. States can leverage existing policy frameworks and infrastructure to minimize public costs while maximizing economic and environmental benefits.

Twenty-four states have enacted climate and energy targets projected to enhance low-carbon electricity shares, creating favorable conditions for DAC deployment. This policy momentum, combined with technological maturity, positions the US DAC sector for significant scaling.

Strategic Deployment Priorities

Effective DAC deployment strategies prioritize resource utilization to maximize climate benefits:

1. First priority: Waste heat and curtailed renewable power
2. Second priority: Dedicated additional low-carbon supply
3. Third priority: Shared grid supply with low carbon intensity

This approach ensures DAC systems deliver maximum net climate benefit while minimizing competition with other clean energy applications and avoiding carbon-intensive marginal generation.

Industry Momentum Building Across States

The DAC sector's growth trajectory reflects successful federal investment in foundational research and demonstration, now transitioning to state-led deployment strategies. With approximately 150 companies globally, more than half US-headquartered, the industry demonstrates robust innovation and commercial potential.

State leadership enables targeted approaches that align DAC deployment with regional advantages, economic development goals, and climate commitments. This distributed strategy reduces implementation risks while accelerating overall sector growth.

As states advance their DAC programs, they're creating a diverse portfolio of deployment models that other regions can adapt. The combination of federal foundational support, state-level implementation, and growing private investment positions the US DAC industry for sustained expansion and global leadership in carbon removal technologies.