Budget 2026-27: ₹20,000 Crore Allocated for Carbon Capture Technologies

The Union Budget has earmarked ₹20,000 crore over the next five years for the development of carbon capture, utilisation and storage (CCUS) solutions, signalling a major policy push towards technologies critical for reducing emissions from India’s most carbon-intensive industries. The move is seen as a long-term enabler for India’s goal of achieving net-zero emissions.

CCUS focuses on capturing carbon dioxide (CO₂) released during industrial processes and preventing it from entering the atmosphere. The captured CO₂ can either be stored for long periods—such as in specialised geological formations beneath the Earth’s surface—or converted into useful chemicals and products.

Rather than being a single technology, CCUS is an umbrella term covering a range of approaches designed to manage CO₂, the principal driver of global warming and climate change. One of its key advantages is that it can be retrofitted to existing power plants and industrial facilities, enabling their continued operation while lowering emissions.

The technology is particularly relevant for hard-to-abate sectors such as cement, steel and chemicals, where emissions are difficult to eliminate through renewable energy or efficiency improvements alone. CCUS can also help offset unavoidable emissions by directly removing CO₂ from industrial exhausts or, in some approaches, from the air.

There are three main methods of capturing carbon dioxide:

• Post-combustion capture, where CO₂ is separated from flue gases after fuel is burnt, often using chemical solvents.
• Pre-combustion capture, which converts fuel into a mixture of hydrogen and CO₂ before combustion, allowing CO₂ to be removed and the hydrogen-rich fuel to be used.
• Oxy-fuel combustion, where fuel is burned in nearly pure oxygen, producing CO₂ and steam, making CO₂ capture easier.

Globally, CCUS projects are gaining momentum, particularly in the United States, Europe and China. However, despite growing interest, the scale remains limited. At present, only about 50 million tonnes of CO₂ are captured annually worldwide—less than 0.5% of the nearly 40 billion tonnes of CO₂ emitted each year.

Sources: IE, LSE