What Happened
- The Union Budget 2026-27 allocated ₹20,000 crore over five years to scale up Carbon Capture, Utilisation, and Storage (CCUS) technologies, marking India's first major public investment in industrial decarbonisation through carbon capture.
- The scheme targets five industrial sectors: power, steel, cement, refineries, and chemicals — collectively responsible for a large proportion of India's hard-to-abate industrial emissions.
- Private sector activity is emerging in parallel: Ambuja Cements (Adani Group) is developing an Indo-Swedish CCU pilot with IIT Bombay to convert captured CO2 into fuels and materials; JK Cement is working on a CCU testbed for applications such as lightweight concrete blocks and olefins.
- The Department of Science and Technology (DST) has created a dedicated research and development roadmap for CCUS technologies.
- India's initiative aligns with global momentum: the IPCC's Sixth Assessment Report identifies CCUS as a necessary component of deep decarbonisation scenarios, particularly for hard-to-abate industrial sectors.
Static Topic Bridges
Carbon Capture, Utilisation, and Storage (CCUS) — Technology Explained
CCUS is a family of technologies designed to prevent CO2 emitted by industrial processes from entering the atmosphere, either by storing it underground permanently (CCS) or converting it into commercially useful products (CCU). The distinction between storage and utilisation is significant from both economic and sustainability perspectives.
- Capture methods:
- Post-combustion capture: CO2 separated from flue gas after fossil fuel combustion using chemical solvents (e.g., amine scrubbing); most mature technology; retrofittable to existing plants
- Pre-combustion capture: Fuel converted to hydrogen and CO2 before combustion; CO2 separated and stored; hydrogen burned cleanly; used in Integrated Gasification Combined Cycle (IGCC) plants
- Oxy-fuel combustion: Fuel burned in pure oxygen; produces concentrated CO2 stream easier to capture; energy-intensive
- Direct Air Capture (DAC): Extracts CO2 directly from ambient air (not point sources); extremely energy-intensive; cost currently $400-1,000 per tonne CO2
- Utilisation pathways (CCU): CO2 converted into → synthetic fuels (e-methanol, e-kerosene), building materials (mineralised concrete), chemicals (methanol, formate), or used in enhanced oil recovery (EOR)
- Storage (CCS): CO2 compressed and injected into geological formations (depleted oil/gas reservoirs, saline aquifers) at depths >800 m; permanence over geological timescales
- Cost range: IEEFA estimates average European CCUS project cost at $198 per tonne CO2 captured (2024); range $60-300 depending on technology and source concentration
- India's first planned CCS project: Carbon capture from a cement plant in Rajasthan (feasibility study stage)
Connection to this news: The ₹20,000 crore budget allocation is targeted specifically at CCU (utilisation) rather than CCS (underground storage) — India lacks the geological survey data and infrastructure for large-scale CCS, making CCU (converting CO2 to products) the more practical near-term pathway.
Hard-to-Abate Sectors and India's Net-Zero Challenge
India's net-zero by 2070 commitment faces its greatest technological challenge in "hard-to-abate" sectors — industries where emissions are intrinsic to the production process and cannot simply be replaced by renewable electricity.
- Hard-to-abate sectors in India (collectively ~35-40% of industrial CO2 emissions):
- Steel: Carbon is a chemical reductant in the blast furnace (not just an energy source); hydrogen-based direct reduced iron (H-DRI) is the alternative but requires green hydrogen at scale
- Cement: ~60% of cement's CO2 emissions come from limestone calcination (CaCO3 → CaO + CO2) — a chemical reaction, not combustion; cannot be eliminated by fuel switching alone
- Refineries and chemicals: Process emissions from catalytic cracking, reforming
- Fertilisers: CO2 is a direct feedstock for urea (CO2 + NH3 → urea); not merely a byproduct
- India's steel sector: ~120 million tonnes annual production (2024-25); 97% via blast furnace/coal-based direct reduction; Scope 1 intensity ~2.5 tonnes CO2 per tonne steel
- India's cement sector: ~410 million tonnes annual production; 3rd largest globally; ~550 kg CO2 per tonne cement
- Perform, Achieve and Trade (PAT) Scheme: Bureau of Energy Efficiency's existing energy efficiency trading scheme covers these sectors; CCUS would complement PAT
- India's steel decarbonisation roadmap: Steel Ministry's National Steel Policy 2017 targets 300 million tonnes capacity by 2030; Green Steel Mission aims for 50% green steel by 2047
Connection to this news: For these hard-to-abate sectors, the equation is blunt: either accept permanent emissions (incompatible with net-zero), implement CCUS (capture and deal with CO2), or fundamentally change the production chemistry (green hydrogen steel, carbon-free cement). CCUS bridges the gap while the more transformative alternatives scale up.
Global CCUS Landscape and India's Positioning
CCUS is a contested technology in climate policy circles. Proponents see it as essential for net-zero in hard-to-abate sectors; critics argue it provides cover for continued fossil fuel use and diverts investment from renewable alternatives.
- Global CCUS capacity (2025): ~50 million tonnes CO2 per year captured — compared to ~37 billion tonnes annual global CO2 emissions (~0.13% of total)
- IEA Net Zero by 2050 scenario: Requires CCUS to capture ~7.6 billion tonnes CO2 per year by 2050 — a 150-fold scale-up from current levels
- Leading CCUS nations: US (largest capacity), Norway (Sleipner project — operational since 1996), UK, Australia, China
- Carbon Capture Investment (2024): IEA estimates CCUS investment needs to reach $90 billion annually by 2030 (from current ~$10 billion)
- Key criticism (IEEFA, CAN): Risk of "CCUS as licence to emit" — fossil fuel companies using future CCUS promises to delay emission reductions today; "carbon lock-in" risk
- India's geological storage assessment: CSIR-NIO and Oil India Limited conducting surveys of sedimentary basins for CO2 storage potential; insufficient data currently for large-scale CCS
- International partnerships: India-US iCET framework includes clean hydrogen and CCUS as areas of technology collaboration; IEA-India CCUS Partnership
Connection to this news: India's ₹20,000 crore commitment represents a strategic bet that CCUS is necessary for industrial decarbonisation, particularly in cement and steel where production chemistry makes complete electrification impossible by 2070. The focus on CCU (utilisation) over CCS (storage) also reflects India's entrepreneurial approach — converting waste CO2 into products that generate revenue rather than simply sequestering it.
Key Facts & Data
- Union Budget 2026-27 CCUS allocation: ₹20,000 crore over 5 years
- Target sectors: Power, steel, cement, refineries, chemicals
- IEEFA average CCUS cost: $198 per tonne CO2 captured (European projects)
- Direct Air Capture cost: $400-1,000 per tonne CO2
- Global CCUS capacity (2025): ~50 million tonnes CO2/year
- IEA net-zero scenario CCUS requirement (2050): 7.6 billion tonnes CO2/year
- India's annual CO2 emissions: ~2.9 billion tonnes (2023)
- India's cement production: ~410 million tonnes/year (3rd globally)
- India's steel production: ~120 million tonnes/year
- Nodal institution for CCUS research: DST; private pilots — Ambuja Cements (IIT Bombay), JK Cement
- India's net-zero target: 2070
- First CCUS CCS project: Cement plant in Rajasthan (feasibility stage)