Today: Nearly 2,000 clean-tech projects that faced the axe look set to get funding in a surprise DOE move; Microsoft's purchasing pause means there are bargains to be had; San Diego now has so much water it’s selling it.

Welcome back: A project to suck carbon out of the atmosphere in Louisiana—which faced closure under the Trump administration—is among nearly 2,000 clean-technology initiatives getting a surprise funding lifeline after a Department of Energy review.

WSJ Pro Sustainable Business's Yusuf Khan writes that direct-air-capture startups Heirloom and Climeworks were awarded $600 million by the Biden administration to build a carbon-capture project in areas of the Pelican State that have traditionally been strongholds of the oil-and-gas industry. 

However, Project Cypress, as the joint venture is known, has sat idle since the start of President Trump’s second term and looked set to be axed. The Trump administration has made widespread funding cuts to climate projects since its return to office.

On Wednesday, Heirloom and Climeworks received a notice the funding would continue, with an initial award of $50 million shared between both companies. The project is among 1,950 DOE-funded clean-technology initiatives to get a reprieve, according to a DOE list reviewed by WSJ Pro Sustainable Business, with total funding of close to $24 billion.

News this week that Microsoft has begun reaching out to some of its carbon removal suppliers to notify them it is pausing new purchases of carbon removal credits has led to paroxysms in the voluntary carbon market.

Fear not, says Gabrielle Walker, co-founder of CUR8, a market maker for carbon removal. She tells WSJ Pro Sustainable Business's Yusuf Khan the development means it's a great time to invest in carbon projects. “Some of the best quality projects that were anticipating selling to Microsoft are going to want to do deals," she said.

Walker added that some venture funds may be dissuaded from funding early-stage carbon removal companies if such a large buyer has pulled out. 

"What this has exposed is the training wheels have come off and we’re seeing where the real market lies,” she said.

Andrew Shebbeare, partner at venture capital fund Counteract, said the news should have been expected. "There was never a situation where Microsoft's appetite to buy carbon removals was infinite," he said. "It will put the onus and emphasis on carbon removal companies to be really effective in how they grow."

• Related: Power-Hungry AI Boom Complicates Big Tech Climate Pledges

With the Colorado River in crisis, Arizona and Nevada could strike a deal with the San Diego County Water Authority to tap millions of gallons of fresh water produced by a Carlsbad ocean-desalination plant, The Wall Street Journal's Jim Carlton writes.

No water is literally shipped; rather, the parties would trade access rights to water sources. States would fund much of the estimated 56,000 acre-feet of water that the desalination plant produces annually in exchange for San Diego’s share of the Colorado River. The agreement could supply enough water for some 500,000 people.

So-called water transfers increasingly offset local shortages, and more of these deals are crossing state lines. Agencies are also creating new supplies for trade, including by recycling sewage water or desalinating ocean water.

The National Association for the Advancement of Colored People sued Elon Musk’s xAI, alleging the company’s efforts to power its data centers in Tennessee and Mississippi are creating a health risk for local residents.

Musk’s artificial intelligence company and its subsidiary MZX Tech are illegally operating gas turbines without an air permit at a data center in Southaven, Miss., in violation of the Clean Air Act, the lawsuit said.

The Journal's Georgia Wells reports that the suit alleged the turbines emit pollution and hazardous chemicals that have been linked to increases in asthma, respiratory diseases, heart problems and certain cancers.

xAI didn’t respond to a request for comment.

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• Doug Field, who led Ford’s electric vehicle development, is leaving the company amid a wider reorganization. (WSJ)
   
• Chinese battery giant CATL reported robust first-quarter profit growth despite a slowdown in electric-vehicle sales in China. (WSJ)
   
• Ares Management backs niche property lender Clearwater PACE with $300 million commitment for energy-efficiency upgrades. (WSJ)
   
• China is reportedly considering limiting solar energy equipment exports Such a move could squeeze U.S. solar companies. (Barron's)
   
• Yancoal Australia agreed to acquire an 80% stake in the Kestrel steelmaking coal mine for up to $2.4 billion. (WSJ)
   
• Chicago-based Clean Core is set to announce a pilot deal to manufacture thorium-based nuclear-reactor fuel. (Heatmap)
   
• To see how the fallout from the Iran war is spreading, check out how much Robert Friedland is charging for acid these days. (WSJ)

WSJ Pro Sustainable Business gives you an inside look at how companies are tackling sustainability. Send your comments to editor Perry Cleveland-Peck at perry.cleveland-peck@wsj.com and reporters Clara Hudson at clara.hudson@wsj.com and Yusuf Khan at yusuf.khan@wsj.com. Follow us on LinkedIn at perrycp, clara-hudson and yusuf_khan.