This came to me by way of Professor Sherman, since it's his father-in-law, Jeffrey Martin, who is one of the main scientists behind this project at Los Alamos. From the New York Times:
Scientists there say they have developed a way to produce truly carbon-neutral fuel and useful organic chemicals at large scale using water and carbon dioxide removed from the air as raw materials....One selling point with Los Alamos’s “Green Freedom” concept, and similar ones, is that reusing the carbon atoms in the captured CO2 molecules as a fuel ingredient avoids the need to find huge repositories for the greenhouse gas. The lab’s researchers, led by F. Jeffrey Martin, say their system could process vast volumes of air using existing giant structures like the cooling towers at nuclear power plants. No need to chop down rain forests or compete with food crops to grow carbon-grabbing fuel crops like corn or switchgrass.
Read the whole thing here. There's a second department connection; this work is being closely studied by the Air Force with the participation of Assistant Secretary Kevin Billings '77. Small world.