Sept 12 (Reuters) - Occidental Petroleum's ( OXY )

carbon capture and sequestration unit 1PointFive said on

Thursday that the U.S. Department of Energy's Office of Clean

Energy Demonstrations has committed up to $500 million to

support the development of its South Texas Direct Air Capture

(DAC) Hub.

The facility had previously received funding from BlackRock,

the world's largest asset manager.

Occidental's first large-scale DAC facility represents a

pivotal economic trial for a technology that the International

Energy Agency says will play a key role for global industrial

decarbonization, despite its high costs in initial tests.

The total award value from the OCED for the facility

could be raised to $650 million for the development of an

expanded regional carbon network in South Texas, according to a

release from Occidental.

The hub's initial carbon dioxide removal capacity of 500,000

metric tons per year could be expanded to over one million

metric tons per year, Occidental added.

Earlier this year, 1PointFive also said it would sell carbon

credits to companies such as AT&T ( T ) and Microsoft ( MSFT ).

These carbon credits are tradable permits that allow the

owner to emit specified amounts of greenhouse gases.