Feds Cut $270M Grant For Carbon Project

Calpine Sutter Energy Center lost a $270 million grant from the U.S. Department of Energy on May 30, as the federal government axed $3.7 billion for carbon capture and decarbonization projects across the country.

The grant was intended to fund the Sutter Decarbonization Project, building an underground pipeline to capture carbon emissions at the SEC and store that carbon approximately 10 miles southwest of the facility.

Along with Sutter Energy Center’s (SEC) grant, 24 other awards nationwide were canceled by the Department of Energy on May 30, including $500 million to Heidelberg Materials US, Inc.; $375 million to Eastman Chemical Company; and $95 million to Nevada Gold Mines, LLC, according to the Associated Press.

“After a thorough and individualized financial review of each award, 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 DOE said in the May 30 statement.

The move is in line with President Donald Trump’s mission to identify what he calls “waste, fraud and abuse” in government spending. Axios said the grant cancellation is “among the biggest and most specific cases yet of Trump 2.0 officials pulling the plug on the Biden administration’s unprecedented subsidiaries for low-carbon energy.”

Conrad Schneider, senior director at the Clean Air Task Force, released a counter statement, calling Wright’s action “bad for U.S. competitiveness in the global market and also directly contradictory to the administration’s stated goals of supporting energy production and environmental innovation.”

“Canceling cutting-edge technology demonstrations, including support for carbon capture and storage projects, undercuts U.S. competitiveness at a time when there is a growing global market for cleaner industrial products and technologies,” Schneider said.

Calpine did not respond to requests for comment.

Calpine announced nine months ago it had entered into a cost share agreement with the U.S. Department of Energy Office of Clean Energy Demonstrations to help bring about the Sutter Decarbonization Project.

The project was expected to capture up to 1.75 million metric tons of carbon dioxide (CO₂) each year, helping California reach its goal of net-zero emissions.

At the time, Calpine officials were pleased with actions of the federal government.

“This initial phase one commitment by the DOE will support the engineering and design of the project, further our community engagement, and advance project planning,” Calpine Senior Vice President Alex Makler said in a statement. “We are grateful to be working together with the local community and elected officials in Sutter County and Yuba City and are pleased to have their continued support.”

The Office of Clean Energy Demonstrations awarded the Sutter Decarbonization Project $8.6 million with a total federal cost share of up to $270 million. Phase one of the project was expected to cost approximately $17.2 million and be conducted over the course of approximately one year starting last August, according to the Office of Clean Energy Demonstrations.

In 2023, Calpine proposed a plan to deploy the state’s first carbon capture installation in Sutter County to the Sacramento Municipal Utility District (SMUD), a major purchaser of power from the Sutter Energy Center, which is located just outside Yuba City’s city limits.

“For decades, SMUD has been a leader in clean energy and carbon reduction,” SMUD Chief Executive Officer & General Manager Paul Lau said in a statement at the time. “Through innovative partnerships like the Calpine Sutter Decarbonization Project, we’re moving boldly toward our goal of zero carbon emissions while setting the standard for low rates, reliable service and an equitable clean energy future with benefits that every community can share in.”

The project was to consist of building a pipeline 8 feet underground to capture carbon emissions at the Sutter Energy Center and store that carbon approximately 10 miles southwest of the facility near Robbins, the Appeal previously reported.

Like all major Calpine projects in California, the Sutter Decarbonization Project was to be constructed with a Project Labor Agreement.

“We are deeply appreciative of the support the State Building and Construction Trades Council of California has provided in reaching this important milestone,” Makler said when the grant appeared to be forthcoming.