India Poised for a Major Investment Surge in Carbon Capture

Q: What is Carbon Capture, Utilisation and Storage (CCUS), and why is it considered critical for India’s decarbonisation strategy despite low per capita emissions?

Carbon Capture, Utilisation and Storage (CCUS) refers to a suite of technologies that capture carbon dioxide (CO₂) emissions from industrial and power generation sources, transport it, and either utilise it in industrial processes or store it permanently in geological formations. The CCUS value chain comprises three stages: Capture from point sources such as steel plants or refineriesTransport via pipelines or other meansUtilisation or Storage through enhanced oil recovery (EOR), conversion to chemicals, or underground sequestrationAlthough India’s per capita emissions are only about 1.9 tonnes—significantly lower than the global average—absolute emissions are high due to its large population and industrial base. Over 70% of India’s emissions originate from hard-to-abate sectors such as steel, cement, fertilisers, power, and refineries. These sectors cannot be fully decarbonised through renewable energy alone.Therefore, CCUS becomes a strategic bridge technology that allows India to pursue its developmental goals under the Viksit Bharat vision while staying aligned with its Net Zero 2070 commitment. It also helps Indian industries remain competitive amid tightening global carbon border regulations.

Q: As a policymaker balancing economic growth and climate responsibility, how would you design a roadmap for CCUS in India?

As a policymaker, I would adopt a phased, sector-focused roadmap. Phase one would anchor 4–6 large projects in high-emission states with clear budgetary support. Priority would be given to steel, cement, refineries, and fertilisers, where emissions intensity is high.Phase two would focus on creating shared infrastructure—pipelines, storage hubs, and digital monitoring systems. Integration with India’s carbon market would ensure long-term economic viability. Financial tools such as green bonds backed by sovereign guarantees would lower borrowing costs.Finally, I would ensure global technology collaboration and domestic innovation. Applied R&D in modularisation, materials optimisation, and digital efficiency can reduce costs over time. This balanced approach aligns India’s $30 trillion GDP ambition with its Net Zero 2070 target.

With a ₹20,000 crore investment plan, India aims to scale up carbon capture technologies while striving for its Net Zero target by 2070.

Surya

•February 24, 2026•6 mins read

India advances commercial-scale carbon capture deployment

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Carbon Capture, Utilisation and Storage (CCUS) in India

1. Strategic Context: CCUS in India’s Net Zero Pathway

India is moving toward the commercial-scale deployment of Carbon Capture, Utilisation and Storage (CCUS), marking a transition from pilot projects to industrial implementation. This comes after years of regulatory roadmaps, policy debate, and sectoral consultations.

Although India’s per capita emissions are 1.9 tonnes per annum—about 40% of the global average and roughly one-fourth of China’s—its absolute emissions are significant due to its large industrial base. Hard-to-abate sectors contribute more than 70% of national emissions, making CCUS critical for decarbonisation.

This effort is linked to India’s commitment to achieve Net Zero by 2070 while sustaining industrial competitiveness amid tightening global carbon regulations such as carbon border adjustment mechanisms.

CCUS addresses emissions from sectors where electrification or renewable substitution is technically difficult. Without such technology, India may face trade disadvantages and struggle to reconcile growth with climate commitments.

2. Budgetary Push and Capacity Targets

The Union Budget 2026–27 announced an outlay of ₹20,000 crore over five years to support CCUS deployment. This marks the first major fiscal backing aimed at commercial-scale projects.

Experts estimate that India could build 10–15 million tonnes (mt) of annual CCUS capacity over the next five years, potentially reaching 20 mt if projects move efficiently. Even 10 mt would signal meaningful entry into large-scale deployment.

Setting up 1 mt per annum of carbon capture capacity in India requires approximately ₹900–1,000 crore, depending on sectoral characteristics.

“Even achieving 10 mt would be a strong start. Once a few million-tonne scale projects are operational, replication becomes much easier.” — Atanu Mukherjee, CEO, M N Dastur

Early large-scale projects create demonstration effects, reduce perceived risks, and improve investor confidence. Without anchor projects, CCUS risks remaining confined to pilot experiments.

Financial & Capacity Estimates:

Budget allocation: ₹20,000 crore (5 years)
Expected capacity: 10–15 mt, possibly 20 mt
Investment required: ~₹15,000 crore for 4–6 projects
Capex per 1 mt capacity: ₹900–1,000 crore
IOCL refinery capture cost: ~$30 (₹2,500) per tonne

3. Focus on Hard-to-Abate Sectors

CCUS is particularly relevant for sectors such as steel, aluminium, fertilisers, cement, refineries, chemicals, and power—industries where process emissions cannot be eliminated easily through renewable energy alone.

India’s approach now prioritises applied innovation over basic invention. The emphasis is on system integration, modularisation, materials optimisation, digital monitoring, and operational efficiency to reduce costs and scale deployment.

Globally, operational CCUS plants capture between 1–2 mt per annum, while the largest facility (ExxonMobil’s Shute Creek, USA) captures 6–7 mtpa.

Industrial decarbonisation is central to India’s $30 trillion GDP aspiration by 2047. If emissions-intensive sectors remain unaddressed, climate policy could constrain industrial expansion and export competitiveness.

4. Infrastructure & Storage: The Missing Link

While carbon capture technologies are mature, the storage and transport components remain underdeveloped in India. The country has significant geological storage potential, but detailed exploration and budgetary support are necessary.

CCUS must evolve into an infrastructure utility model, involving shared carbon pipelines, storage hubs, and transport networks—similar to electricity grids or water systems.

Linking CCUS to emerging carbon markets and carbon trading systems will help establish price signals for carbon dioxide, guiding investment decisions in capture, transport, and storage.

Without integrated infrastructure and carbon pricing, CCUS projects may remain isolated and economically unviable. System-level planning is essential for scaling.

Key Reform Areas:

Geological exploration for storage sites
Shared carbon transport infrastructure
Integration with carbon markets
Financing mechanisms for pipelines and storage hubs

5. Financing Architecture & Institutional Innovation

Scaling CCUS requires access to low-cost, long-term capital. Proposals include establishing a Carbon Capture Finance Corporation, leveraging sovereign backing to reduce the cost of capital.

Instruments such as carbon bonds or green bonds, backed by sovereign support, can lower financing costs and attract institutional investors.

Affordable financing is critical because CCUS involves high upfront capital expenditure and long gestation periods, particularly in infrastructure components.

If financing costs remain high, CCUS projects may fail to compete with alternative mitigation strategies. Sovereign-backed instruments can catalyse private participation.

6. Current Domestic Pilots & Demonstration Projects

India has initiated several pilot and demonstration projects:

NTPC (2022): 20 tonne per day (TPD) carbon capture plant converting CO₂ to methanol at Vindhyachal.
ONGC: 100 TPD CCUS pilot at Gandhar oilfield (Gujarat), injecting CO₂ into depleted wells and testing Enhanced Oil Recovery (EOR).
Tata Steel (2021): 5 TPD pilot at Jamshedpur blast furnace.
JSW Steel: 100 TPD facility at Dolvi DRI plant.

These projects signal sectoral interest but remain small compared to commercial-scale global facilities.

Pilots build technical capacity and reduce operational uncertainty. However, without scaling up, they will not significantly reduce national emissions.

7. Global Context & Scale Gap

According to energy thinktank Ember, annual global emissions stand at 38.6 billion tonnes, while operational CCUS facilities globally capture less than 50 mt annually, equivalent to just 0.13% of global emissions.

This highlights a substantial gap between technological readiness and meaningful climate impact.

India, despite high technology readiness levels (TRL) in capture and storage, has not yet implemented CCUS at scale.

The global scale gap underscores that CCUS alone cannot solve the climate crisis but remains essential for specific sectors. Delay in scaling may widen India’s transition burden in later decades.

8. Governance Linkages: Viksit Bharat & Net Zero

NITI Aayog emphasises that India’s central challenge is balancing the Viksit Bharat vision—targeting a $30 trillion GDP by 2047—with the commitment to Net Zero by 2070.

CCUS enables decarbonisation without premature deindustrialisation. It aligns industrial policy, climate policy, and trade strategy in an era of carbon-conscious global supply chains.

Thus, CCUS is not merely an environmental tool but a strategic economic instrument.

If climate and development goals are pursued in silos, policy contradictions may emerge. CCUS offers a bridge between growth and decarbonisation.

Conclusion

India’s ₹20,000 crore fiscal push signals a shift from pilot-scale experimentation to commercial deployment of CCUS. Building 10–15 mt capacity over five years, strengthening storage infrastructure, linking to carbon markets, and enabling affordable financing will determine whether CCUS becomes a transformative climate solution or remains marginal.

Sustained policy clarity, infrastructure development, and institutional innovation will be crucial in integrating CCUS into India’s long-term low-carbon growth strategy.

Quick Q&A

Everything you need to know

Carbon Capture, Utilisation and Storage (CCUS) refers to a suite of technologies that capture carbon dioxide (CO₂) emissions from industrial and power generation sources, transport it, and either utilise it in industrial processes or store it permanently in geological formations. The CCUS value chain comprises three stages:

Capture from point sources such as steel plants or refineries
Transport via pipelines or other means
Utilisation or Storage through enhanced oil recovery (EOR), conversion to chemicals, or underground sequestration

Although India’s per capita emissions are only about 1.9 tonnes—significantly lower than the global average—absolute emissions are high due to its large population and industrial base. Over 70% of India’s emissions originate from hard-to-abate sectors such as steel, cement, fertilisers, power, and refineries. These sectors cannot be fully decarbonised through renewable energy alone.

Therefore, CCUS becomes a strategic bridge technology that allows India to pursue its developmental goals under the Viksit Bharat vision while staying aligned with its Net Zero 2070 commitment. It also helps Indian industries remain competitive amid tightening global carbon border regulations.

The ₹20,000 crore allocation in the 2026–27 Budget marks a shift from pilot experimentation to commercial-scale implementation. India aims to build 10–15 million tonnes (mt) of CCUS capacity over five years, potentially up to 20 mt if executed efficiently. Even achieving 10 mt would establish proof of concept at scale, encouraging replication across sectors.

This allocation signals government commitment to support 4–6 anchor projects in hard-to-abate industries such as steel, aluminium, fertilisers, and refineries. For example, IOCL’s refinery project demonstrates relatively low capture costs (around ₹2,500 per tonne), showing economic viability when supported by policy and finance.

Importantly, such public investment reduces risk perception for private players and global collaborators. In infrastructure-led transitions, early sovereign backing often unlocks larger private capital flows, similar to what occurred in India’s renewable energy sector.

Scaling CCUS in India requires moving beyond isolated pilots to an integrated infrastructure model. First, storage potential must be mapped and supported through geological surveys and demonstration projects. Without proven storage sites, capture investments may remain stranded.

Second, CCUS must be linked with carbon markets and trading systems. Pricing carbon provides economic incentives for industries to invest in capture technologies. Integration with India’s emerging carbon market framework would allow captured CO₂ to generate tradable credits.

Third, the proposal for a Carbon Capture Finance Corporation is crucial. Leveraging sovereign backing to issue green or carbon bonds can lower the cost of capital. Shared pipeline and storage infrastructure—similar to electricity grids—would reduce duplication of investment and enhance economies of scale.

While CCUS is technologically proven, its global contribution remains limited. Operational facilities worldwide capture less than 50 mt annually—just 0.13% of global emissions. This highlights the scale gap between climate ambition and deployment reality.

Key challenges include high capital expenditure (₹900–1,000 crore per mt capacity in India), uncertain carbon pricing, and long-term storage risks. Critics argue that CCUS may prolong fossil fuel dependence if not carefully regulated. There are also concerns about monitoring, leakage, and liability frameworks.

However, dismissing CCUS entirely may be impractical for India. In sectors like cement and steel, process emissions cannot be eliminated through electrification alone. Thus, CCUS should complement—not substitute—renewables and efficiency measures. A balanced portfolio approach is essential.

India’s pilot projects offer valuable insights into technological feasibility and sector-specific applications. NTPC’s 20 TPD plant at Vindhyachal converts captured CO₂ into methanol, demonstrating utilisation pathways. ONGC’s Gandhar project explores geological storage and enhanced oil recovery, capturing 100 TPD from industrial clusters.

In the steel sector, Tata Steel’s 5 TPD plant in Jamshedpur and JSW Steel’s 100 TPD unit at Dolvi illustrate industrial adaptability. JSW refines captured CO₂ for the food and beverage industry, showcasing commercial utilisation potential.

The key lesson is that India has technical capability but needs scale and financing support. Transitioning from tonne-per-day pilots to million-tonne-per-year facilities is the real test. Strong policy clarity and global technology partnerships will determine success.

As a policymaker, I would adopt a phased, sector-focused roadmap. Phase one would anchor 4–6 large projects in high-emission states with clear budgetary support. Priority would be given to steel, cement, refineries, and fertilisers, where emissions intensity is high.

Phase two would focus on creating shared infrastructure—pipelines, storage hubs, and digital monitoring systems. Integration with India’s carbon market would ensure long-term economic viability. Financial tools such as green bonds backed by sovereign guarantees would lower borrowing costs.

Finally, I would ensure global technology collaboration and domestic innovation. Applied R&D in modularisation, materials optimisation, and digital efficiency can reduce costs over time. This balanced approach aligns India’s $30 trillion GDP ambition with its Net Zero 2070 target.