Whalesbook
### CCUS Takes Center Stage in India's Climate Strategy
India has signaled a significant policy shift by proposing a Rs 20,000 crore investment over the next five years dedicated to scaling Carbon Capture, Utilisation, and Storage (CCUS) technologies. The announcement, made during the Union Budget 2026-27 on February 1, 2026, positions CCUS as a cornerstone of the nation's long-term climate and industrial decarbonisation strategy. This allocation is directly linked to the national CCUS roadmap, released in December 2025, which targets large-scale deployment across sectors identified as the most challenging to decarbonise: power, steel, cement, refineries, and chemicals. The Finance Minister highlighted that this investment is crucial for advancing CCUS technologies to higher levels of readiness for end-use applications, particularly where cost-effective deep emission cuts remain elusive.
### Bridging Deployment Gaps and Achieving Net Zero Ambitions
The proposed funding is intended to facilitate the transition from pilot projects to commercially viable, large-scale CCUS systems. These targeted sectors are substantial contributors to India's industrial emissions, and many lack readily available alternatives for significant reductions. This initiative is integral to India's overarching commitment to achieving Net Zero emissions by 2070. The Research, Development, and Innovation Roadmap for CCUS, published by the Department of Science and Technology in December 2025, articulates an ambitious objective to capture 750 million tonnes of carbon dioxide (CO2) annually from these difficult-to-abate sectors by 2050. The roadmap prioritises advancing indigenous technologies, supporting demonstration projects, fostering international cooperation, and attracting private investment.
### Global Trends and Emerging Criticisms
Globally, CCUS is increasingly recognised as a vital, albeit debated, tool in climate mitigation efforts. Approximately 50 CCUS facilities are operational worldwide, capturing around 50 million tonnes of CO2 annually. The project pipeline remains robust, with 44 facilities under construction and over 500 in various planning stages, indicating sustained global interest. However, the technology's effectiveness and role are subjects of ongoing debate. Reports highlight ongoing criticisms, including the slow pace of deployment relative to climate needs, high operational costs, energy penalties, and concerns that the technology could entrench continued fossil fuel use rather than drive structural energy system changes.
### Industry and Expert Reactions
Indian industry leaders and climate experts have generally welcomed the Budget allocation as a pragmatic approach. Experts noted that the commitment signifies the indispensable role of CCUS in achieving emission reductions in sectors where electrification or fuel switching is not yet feasible. The immediate challenge lies in execution, with suggestions that funding should target shared CO2 transport and storage infrastructure, provide support for early-mover risks, and back commercial-scale demonstration projects. Crucial needs include clear regulatory frameworks covering measurement, verification, third-party access to transport networks, and long-term storage liability to attract private capital.
### Balancing Industrial Growth with Climate Responsibility
For policymakers, CCUS presents a pathway to align climate commitments with continued industrial expansion. Sectors like steel, cement, refining, and chemicals are foundational to India's infrastructure development, manufacturing growth, employment, and export potential. Imposing drastic emission cuts without transitional technologies could jeopardise competitiveness and investment. By championing CCUS, the government signals an intent to achieve decarbonisation without compromising industrial capacity. This allocation directly addresses the competitiveness challenge posed by mechanisms like the EU's Carbon Border Adjustment Mechanism, offering a credible route for hard-to-abate sectors to remain globally competitive while reducing their emissions. The Rs 20,000 crore investment is thus positioned not merely as a research grant but as a strategic anchor to integrate CCUS within India's broader energy frameworks, including power, fuels, and emerging hydrogen strategies, potentially building domestic expertise in a globally significant decarbonisation technology.