The ₹20,000-Crore Push for Carbon Capture: A Game Changer or a Mere Pilot?

On February 1, 2026, the Union Budget signaled a bold move: a ₹20,000-crore allocation towards Carbon Capture, Utilisation, and Storage (CCUS) technologies targeting five high-emitting industrial sectors — power, steel, cement, chemicals, and refineries. While this financial commitment underscores India’s intent to integrate CCU into its industrial and climate strategies, the announcement also raises critical questions about feasibility, equity, and the elephant in the room: infrastructure gaps. For a country aspiring to achieve net-zero emissions by 2070, this may be a much-touted leap, but is it the one we need?

The Break From Business-As-Usual

India is not new to ambitious decarbonisation pledges. However, this allocation marks a distinct shift from pilot projects and academic R&D to policy-backed deployment. The Ministry of Petroleum and Natural Gas has already identified sector-specific CCU initiatives under a draft 2030 roadmap. More significantly, private sector actors like JK Cement and Ambuja Cements (Adani Group) are partnering with institutions such as IIT Bombay for CCU pilots aimed at producing lightweight concrete blocks, bio-alcohols, and specialty chemicals. Put simply, the ₹20,000-crore allocation signifies a systemic attempt to mainstream CCUS — a pivot from its earlier status as fringe climate technology.

What makes this move particularly noteworthy is its aim at industrial decarbonisation in sectors where emissions are process-related, not just energy-related. Steel production and cement, for instance, inherently produce CO₂ during chemical reactions. Renewable energy, no matter how abundant, cannot eliminate emissions from such processes. The new roadmap therefore addresses a previously neglected segment of India’s emissions matrix.

Getting the Machinery in Place

Institutionally, the policy momentum is driven by the Department of Science and Technology (DST), which crafted India’s R&D roadmap for CCUS in 2020. This was followed by concrete frameworks under the Ministry of Petroleum and Natural Gas. The draft 2030 roadmap highlights actionable projects, while the carbon capture tax incentives proposed in the budget suggest an effort to emulate successful global models like the U.S. federal credits under Section 45Q of the Internal Revenue Code. However, what works in the U.S. may falter in India without addressing key bottlenecks.

Consider infrastructure: meaningful CCU deployment requires co-located industrial clusters, robust CO₂ transportation pipelines, and integration with downstream manufacturing industries. India lacks such systems outside a few, unevenly developed industrial hubs like Gujarat or Maharashtra. For sectors like steel and cement, dominated by geographically scattered plants, this poses a logistical nightmare. The ₹20,000-crore fund may build pilot corridors, but large-scale infrastructure homologous to Europe’s industrial CCUS networks is far out of reach.

When Numbers Tell a Different Story

The government’s case for accelerated adoption hinges on both climate and economic arguments. Hard-to-abate industries collectively account for nearly 40% of India’s total CO₂ emissions — a disproportionately high share. Current global estimates peg the cost of capturing 1 tonne of CO₂ at ₹6,500-₹9,000 (USD 80-110). For domestic adoption at industrial scales, these costs must plummet by half or more, factoring energy subsidies and technology localisation.

Global precedents are sobering. Consider the EU's ambitious CCU-satellite hubs aligned with its Circular Economy Action Plan. Deployment in the EU benefits from standardized certification frameworks for CO₂-derived products, which create stable demand and investment confidence. India, by contrast, is yet to legislate market regulations or incentives for such products. The uncertainty discourages private players, despite their involvement in state-sponsored pilots.

This tension is yet more pronounced in funding. The ₹20,000-crore allocation may appear substantial but pales against the estimated ₹2-3 lakh crore investment required to decarbonize industries by 2035. Without concessional finance mechanisms and subsidies, the policy risks becoming performative rather than transformative.

The Uncomfortable Questions Nobody’s Asking

Despite the momentum, few are scrutinizing the structural challenges underlying this push. Start with equity: most of India’s industrial plants are mid-scale, unlike concentrated mega-hubs seen in developed economies. Should the burden of CCUS compliance fall disproportionately on smaller firms, could it stunt industrial competitiveness?

Then there’s market feasibility. CCU products are often uncompetitive against fossil alternatives absent green premiums. Without mandated procurement norms or cross-industry agreements, domestic industries might remain lukewarm adopters. Further complicating matters is the conspicuous absence of a legal framework to govern CCUS operations, liability sharing, and carbon credit certifications.

The skepticism intensifies if we widen our gaze to the political economy. How will state governments, in whose jurisdiction industrial regulations mainly fall, adapt capacity to monitor and enforce these initiatives? Variations in state-level implementation have hampered past climate policies like the Perform, Achieve, and Trade (PAT) scheme. With CCUS, this variability could derail coordinated efforts further before even scaling begins.

What India Can Learn from the UAE’s Precision

If India seeks lessons, it must look towards the UAE’s meticulous integration of green hydrogen with CCUS technologies. The UAE’s Al Reyadah project, operational since 2016, embodies vertical integration — capturing CO₂ from a steel plant and injecting it into oil fields for Enhanced Oil Recovery (EOR). Such models, though unlikely to be replicable wholesale given India’s nascent hydrogen sector, offer a roadmap for synchronizing industrial by-products with energy systems. However, Al Reyadah succeeded precisely because of the UAE’s political will, streamlined permitting, and entrepreneurial leadership — all inconsistencies in India’s fractured industrial regulatory space.

Testing Governance Capacity

Ultimately, the success of India’s ₹20,000-crore CCUS initiative will rest on the state’s ability to regulate coherently, the private sector’s readiness to absorb upfront losses, and, crucially, the competitiveness of decarbonisation technologies vis-à-vis global markets. The ambition is impressive. The machinery, as of now, is anything but.

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