India is preparing a major public funding push for carbon capture, utilization, and storage, also known as CCUS. In the Union Budget for 2026–27, the government set out a plan to support CCUS with a proposed outlay of ₹20,000 crore over the next five years. That is ₹200 billion, which is about US$2.2 billion.
The budget document places the measure under efforts to improve long-term energy security and stability. It also describes CCUS as a scheme with that ₹20,000 crore outlay.
The amount matters because CCUS is expensive and hard to scale. A clear budget line signals that India wants to move beyond small pilots and research projects. It also shows the government is looking for options to reduce emissions in industries that are difficult to clean up quickly.
The plan comes as India faces a practical challenge. The country is building large amounts of renewable energy, but parts of the economy still rely on high-emitting industrial processes.
Cement, steel, refineries, chemicals, and thermal power remain central to growth. These sectors often cannot cut emissions to near zero with renewables alone, at least not in the short term. This is where the government sees a role for carbon capture.
From Policy Papers to Pipes and Storage
The budget measure points to CCUS as a way to raise “technology readiness” and expand end-use applications. In plain terms, that means the government wants more projects that move from study to real equipment in real plants. It also suggests the plan will target large emitting sectors where capture and storage could, in theory, reduce emissions without shutting down existing production too quickly.
India’s Ministry of Petroleum and Natural Gas has already described CCUS as an area where it is working to build a practical strategy and encourage collaboration across the oil and gas sector. That includes planning for how to implement capture, transport, use, and storage options in India’s energy system.
This new budget funding could connect to that effort in two ways.
- First, it can reduce early financial risk for companies. Carbon capture equipment adds cost. It also adds operating needs, such as energy use, maintenance, and monitoring. Without support, many firms delay investment because they do not see a near-term return.
- Second, it can help build shared infrastructure. CCUS is not just one machine, and it often needs pipelines, compressors, monitoring systems, and long-term storage sites. Shared infrastructure can lower costs when several plants connect to the same transport and storage network.
The budget document does not yet list every rule, incentive rate, or eligibility condition in the public summary. But the stated five-year outlay sets a clear ceiling for public support and signals that the government expects a pipeline of projects, not a single pilot.
Why India is Looking at Carbon Capture Now
India has set a long-term goal of net-zero emissions by 2070. That pledge has shaped policy planning across power, industry, fuels, and carbon markets.
In a 2022 press release on a national CCUS policy study, the government highlighted India’s climate direction, including steps toward net zero by 2070 and the need to cut emissions in hard-to-abate sectors.
In late 2025, India also released a national R&D roadmap for CCUS through the Department of Science and Technology. The roadmap aims to guide coordinated action and speed up technology deployment, with a focus on hard-to-abate sectors such as cement, steel, and power.
These moves show a pattern. India is building the “soft” parts of a CCUS system first—research priorities, policy frameworks, and coordination. The budget outlay is a step toward the “hard” parts—real projects and infrastructure.
There is also an external trade pressure. Many Indian exporters expect stricter carbon rules in major markets. Policies such as the European Union’s carbon border measures have pushed firms to look for ways to reduce the emissions tied to their products.
CCUS is one option that can reduce emissions at the facility level, especially in cement, steel, and refining, where process emissions are hard to remove.
At the same time, India still needs to expand its energy supply for growth. That includes reliable power for industry and cities. A CCUS program can fit into this reality because it aims to cut emissions without requiring an immediate shutdown of existing assets.
A Tool for Tough Emissions, Not a Silver Bullet
CCUS works in three main steps. First, a plant captures carbon dioxide from flue gases or industrial streams. Second, it compresses and transports the CO₂. Third, it stores the CO₂ underground or uses it in products such as fuels, chemicals, building materials, or enhanced oil recovery.
In practice, storage is the main constraint. Projects need suitable geology, injection tests, monitoring systems, and long-term rules on liability. Without proven storage, capture alone does not deliver lasting emissions cuts. Below is India’s carbon storage capacity shown in a geological map:
Globally, CCUS remains far below the scale required in net-zero scenarios. The International Energy Agency (IEA) estimates that global carbon capture capacity reached just over 50 million tonnes of CO₂ per year as of early 2025. This is up modestly from earlier years but still far below the levels needed in most net-zero climate pathways.
In its Net Zero pathway, capture rises to 1,024 Mt by 2030 and 6,040 Mt by 2050. As of early 2025, only just over 50 Mt per year of capture capacity is operating worldwide.
The IEA reports that even if all planned projects move forward, global capture capacity will only hit about 430 Mt per year by 2030. The planned storage capacity is around 670 Mt. This gap explains why the IEA stresses faster storage development and shorter project lead times.
India has been laying the groundwork for this challenge. A draft 2030 CCUS roadmap linked to the oil and gas sector compiles early estimates of national storage potential.
It identifies deep saline aquifers as the largest category, with about 291 gigatonnes (Gt) of estimated capacity. It mentions potential storage of 97–316 Gt in basalt formations, 3.5–6.3 Gt in coal reservoirs, and around 1.2 Gt in oil fields for CO₂-enhanced oil recovery. These figures reflect theoretical or early-stage estimates and still require site-level validation.
CCUS is most relevant in hard-to-abate sectors where emissions come from chemistry, not just fuel use. Cement is a clear example. Even with clean power, roughly half of cement emissions come from the calcination process itself. Steel also poses challenges, as the sector emits high carbon.
Costs remain a key barrier. The IEA estimates capture costs of $15–25 per tonne of CO₂ for high-purity industrial streams. In contrast, more diluted streams, like cement or power generation, cost $40–120 per tonne. Transport, injection, and long-term monitoring add further costs and complexity.
These limits explain why CCUS is not a replacement for renewables, efficiency, or electrification. India’s policy shows that the government views CCUS as a helpful tool. It can cut emissions in tough sectors, but only if storage, regulation, and project delivery happen quickly.
Where the Money Goes Will Matter Most
The headline figure—₹20,000 crore over five years—sets the scale. What matters next is how the money is used.
Project selection will shape outcomes. A focus on a few large hubs could support shared CO₂ transport and storage. A scattered approach may fund pilots but limit infrastructure build-out.
Sector priorities also matter. Budget signals point to power, steel, cement, refineries, and chemicals—all high-emitting industries with large and, in some cases, concentrated CO₂ streams.
Rules will be just as important as funding. India is developing an Indian Carbon Market under the Carbon Credit Trading Scheme. Companies will need clarity on whether captured and stored CO₂ can earn credits and under what standards.
Storage readiness remains a final test. Proven sites, test drilling, and long-term monitoring will be essential to move from plans to scale. If these pieces align, public funding could accelerate real deployment. If not, it may support pilots without delivering deep emissions cuts.
For now, the budget line makes one point clear. India is putting real public funding behind carbon capture, and it is doing so with an amount large enough to change corporate planning in several heavy industries.