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DOE taps Houston company's facility to advance carbon capture, storage infrastructure

Calpine’s Baytown Decarbonization Project will capture around two million metric tons of carbon dioxide for permanent sequestration each year. Photo via LinkedIn

Earlier this month, a Houston power company was selected by the Department of Energy's Office of Clean Energy Demonstrations for a cost-sharing agreement for a commercial-scale carbon capture and storage project.

Calpine's Baytown Decarbonization project is projected to capture and store about two million metric tons of carbon dioxide each year. The Baytown Energy Center is an existing 896-megawatt natural gas combined heat and power facility, according to a news release, "that provides steam and power to the adjacent Covestro chemicals manufacturing facility as well as power to the Texas electric grid."

The project will add post-combustion carbon capture equipment that will reduce the emissions intensity of two of its three combustion turbines at a design capture rate of 95 percent. In addition to the Baytown project, the DOE also selected Calpine’s carbon capture project at its Sutter Energy Center in California.

“We are very pleased and honored that the DOE has recognized the quality of this project and the strength of Calpine’s CCS program,” Thad Hill, CEO of Calpine Corp., says in the release. “We are looking forward to working with the DOE to finalize the cost-sharing agreement and with our other stakeholders to advance the development of the Baytown Decarbonization Project. Carbon capture is an important technology for decarbonizing the electricity sector and the economy. Calpine is very grateful for the commitment and support for the project by our stakeholders.”

The Baytown Decarbonization Project is being developed collaboratively with local stakeholders in East Houston. In addition to expanding full-time job opportunities, Calpine will enhance workforce development programs, target procurement with diverse and small business enterprises, and work with local schools and other organizations.

"This is a critical step towards decarbonizing Calpine’s facility, which is located on our Covestro Baytown site,” Demetri Zervoudis, Covestro head of operations for North America and Baytown site general manager, says in the release. “Carbon capture and storage technology is an important tool for the chemical industry to reduce carbon emissions, and it is encouraging to see Calpine at the forefront of this transition.”

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A View From HETI

Chevron is in talks with Microsoft and Engine No. 1 about a massive natural gas power plant in Texas. Photo via Getty Images

Software giant Microsoft is negotiating exclusively with Houston-based oil and gas titan Chevron and investment firm Engine No. 1 about the development of a $7 billion power plant in West Texas that would supply electricity for a Microsoft data center campus.

The proposed natural-gas-fired plant initially would generate 2,500 megawatts of electricity, Bloomberg reports. The plant would be built near Pecos, a Permian Basin city, in an area where Microsoft plans to build a 2,500-megawatt data center campus on a 7,000-acre site.

A deal with Microsoft would secure a long-term customer for the plant’s output and help finance its construction, Bloomberg says. The project, expected to be producing power by 2030, still requires tax and environmental approvals as well an agreement to terms among Chevron, Engine No. 1, and Microsoft.

In a statement issued after Bloomberg reported the news, Chevron acknowledged it was in exclusive talks with Engine No. 1 and Microsoft, but the oil and gas company offered no details.

Chevron says the proposed plant “reflects an emerging shift in how power for AI is being developed, bringing energy supply closer to demand through co-located, behind-the-meter generation to deliver reliability while helping avoid added strain on regional electricity systems. It pairs sustained, always-on demand from advanced computing with proven capability to design, build, and operate large-scale energy infrastructure.”

Development of gas-powered electrical plants for AI data centers represents a new—and potentially lucrative— business line for Chevron. In 2025, Chevron, Engine No. 1 and GE Vernova announced a partnership to produce natural gas for AI data centers in the U.S.

Chevron’s collaboration with Engine No. 1 has already secured an order for seven large natural gas turbines from GE Vernova, according to Bloomberg.

“Energy is the key to America’s AI dominance,” Chris James, founder and chief investment officer of Engine No. 1, said last year. “By using abundant domestic natural gas to generate electricity directly connected to data centers, we can secure AI leadership, drive productivity gains across our economy, and restore America’s standing as an industrial superpower.”

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