The Union Budget 2026-27 has announced a Rs 20,000-crore scheme to scale up carbon capture, storage and utilisation across five high-emitting industrial sectors.
The move aims to move CCUS from pilot projects to policy-backed deployment as part of India’s net-zero by 2070 commitment.
While carbon capture may help cut residual emissions in hard-to-abate sectors, its costs, governance and limits remain critical concerns.
Under the Union Budget 2026-27, Union Finance Minister Nirmala Sitharaman announced a Rs 20,000 crore outlay over the next five years through a dedicated scheme for Carbon Capture, Storage and Utilisation (CCUS). The scheme will support CCUS initiatives to aid the decarbonisation goals of five industrial sectors of the economy, namely, power, steel, cement, refineries and chemicals.
CCUS refers to a set of technologies that capture carbon dioxide emissions from industrial processes or power plants and either reuse them or store them safely underground, helping reduce the amount of climate-warming gases released into the atmosphere. In practice, this involves capturing CO₂ at the source, transporting it via pipelines or other means, and then either using it in industrial applications or storing it securely deep underground to prevent its release into the atmosphere.
Under India’s long-term climate commitments under the Paris Agreement (2015), the country has announced plans to achieve Net Zero by 2070. The CCUS scheme has been characterised as a pillar of long-term energy security and stability. The outlay forms part of the Budget’s segment on strengthening the foundations of economic growth. Earlier this week, the Economic Survey 2025-26 described environment and climate action as central to building a resilient, competitive and development-driven India.
In December 2025, India’s Union Department of Science and Technology released an R&D roadmap to enable India’s Net Zero goals through CCUS. The roadmap draws on seven years of prior research and is aligned with broader national innovation schemes such as the Rs 1 lakh crore Research, Development and Innovation (RDI) initiative to attract investment and private-sector participation.
It outlines phased Research and Development (R&D) pathways — from foundational research and pilot demonstrations (2025-30), to industrial integration and regulatory development (2030-35), and finally to commercial deployment and scale-up (2035-45).
The roadmap proposes a three-phase R&D strategy for developing CCUS technologies in India. First, near-term efforts focus on scaling up and deploying existing, proven carbon capture and storage technologies across industrial sectors. Second, mid-term work prioritises the demonstration and validation of next-generation capture, utilisation and storage solutions that improve performance and cost efficiency. Third, long-term investments support fundamental research into breakthrough concepts and disruptive innovations that could transform CCUS capabilities and reduce costs over time.
It also highlights priority industrial and geological CCUS clusters by mapping key basins such as the Krishna-Godavari Basin, Rajasthan’s geological formations, Tamil Nadu’s sedimentary zones, and other onshore and offshore basins. These are linked with high-emission sectors — including power, steel, cement and refineries — to enable shared carbon dioxide (CO₂) transport and storage infrastructure and scalable deployment across India’s major carbon sources.
Similarly, a task force of the Union Ministry of Petroleum and Natural Gas has floated a draft CCUS roadmap for upstream exploration and production companies for 2030, aimed at accelerating CCUS development in India’s upstream oil and gas sector. Earlier, in 2022, NITI Aayog — Centre’s principal policy think tank — published CCUS: Policy Framework and Deployment Mechanism in India, emphasising CCUS as a key tool to reduce emissions from hard-to-abate industrial sectors, support deep decarbonisation, and enable clean product pathways.
Globally, CCUS is increasingly framed as a supporting — but limited — tool in decarbonisation pathways. It is best viewed as a targeted, supplementary intervention, necessary in specific sectors, but effective only when combined with rapid renewable energy expansion and strong climate safeguards.
The Intergovernmental Panel on Climate Change (IPCC), in its Sixth Assessment Report (AR6, 2022), notes that pathways limiting warming to 1.5°C or well below 2°C become “considerably more challenging” without carbon capture, particularly for hard-to-abate sectors such as cement, steel and chemicals, where emissions arise from industrial processes rather than fuel use alone.
While renewables and efficiency must deliver the bulk of emissions reductions, CCUS can play a role in cutting residual emissions from existing assets and enabling low-carbon fuels such as hydrogen. At recent Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) meetings, including COP26 (2021) and COP28 (2023), CCUS has been referenced as part of broader mitigation toolkits, particularly for industrialised and emerging economies, while repeatedly stressing that it should not delay the phase-down of fossil fuels.
However, concerns around CCUS include high costs, slow deployment, limited operating capacity, and the risk of its use to justify continued fossil fuel extraction. According to IEEFA estimates, the cost of capture, transportation and storage across European projects averages $198 per tonne of CO₂ captured — nearly double forecast carbon prices of around $105 per tonne over the remainder of the decade. Comparable assessments for Chinese projects estimate costs at roughly $30-40 per tonne of CO₂. While deployment levels vary, the cost challenge of the technology cannot be denied.
Parth Kumar, programme manager at Delhi-based think tank Centre for Science and Environment noted that the utility of CCUS as a tool for decarbonisation is clear.
“The Union Budget’s capital allocation formally recognises this,” Kumar said. “However, the nudge provided by this scheme should not overshadow emissions-reduction pathways such as cleaner fuels and renewable energy, alongside emerging technologies and cleaner production practices incorporating energy efficiency and circularity. CCUS should be restricted to addressing emissions that cannot be eliminated during industrial operations, particularly in hard-to-abate sectors.”
India’s early experiments with carbon capture, utilisation and storage are currently limited to a small number of pilot projects, largely financed by public-sector companies. NTPC Ltd.’s 500 MW coal-based thermal unit at the Vindhyachal Super Thermal Power Station in Madhya Pradesh began carbon capture operations around 2022, capturing about 20 tonnes of CO₂ per day from flue gas using a modified solvent-based system.
The captured CO₂ is combined with green hydrogen to produce methanol, marking a practical step towards turning waste emissions into a valuable product and demonstrating industrial-scale carbon utilisation in India’s power sector. In 2023-24, the project reached a milestone with the production of methanol derived from captured carbon dioxide, demonstrating a closed-loop utilisation pathway under controlled conditions.
In late 2025, NTPC also began drilling India’s first geological CO₂ storage borewell at the Pakri Barwadih coal mine in Jharkhand to gather geological and reservoir data from depths of around 1,200 metres and assess the potential for long-term underground storage. This work involves core and fluid sampling, seismic monitoring and modelling to ensure safe, permanent containment, laying the groundwork for future commercial-scale CO₂ storage.
Similarly, this month, Oil and Natural Gas Corporation (ONGC) announced its first full-scale carbon capture and storage (CCS) pilot at the Gandhar oilfield in Gujarat. The project captures CO₂ from nearby industrial units in the Dahej region and ONGC’s Hazira plant, injecting around 100 tonnes per day into two depleted onshore wells for underground storage. It will also test the use of CO₂ for enhanced oil recovery (EOR), generating data on storage integrity and reservoir behaviour to inform future CCS deployment in hard-to-abate sectors.
In the steel sector, two CCUS pilot projects have been undertaken so far. In 2021, Tata Steel commissioned a five-tonne-per-day carbon capture plant at its Jamshedpur Works, capturing CO₂ directly from the blast furnace. JSW Steel has also implemented a 100-tonne-per-day carbon capture and storage facility at its Dolvi DRI plant, with the captured CO₂ intended for use in the food and beverages industry.
The final design details of the scheme will determine the future trajectory of CCUS initiatives across the five identified sectors. The role of public finance, alongside private investment, will be critical in deploying the technology at scale in the coming years to support India’s ongoing decarbonisation goals.