India’s Carbon Capture Moment Has Arrived

Budget Boost Signals Major Push for Carbon Capture

India's latest Union Budget has placed carbon capture, utilization, and storage at the heart of its climate action plan, allocating around 20,000 crore rupees, or about $2.4 billion, over the next five years.

This funding aims to propel projects from experimental stages into full commercial operation, targeting hard-to-decarbonize industries like steel, cement, power generation, refining, and chemicals.

These sectors form the backbone of India's economy but are major contributors to greenhouse gas emissions, making them prime candidates for this technology.

By investing public money, the government is addressing the need for deep emission reductions without halting industrial expansion, especially as global trade pressures mount from mechanisms like Europe's carbon border adjustment.

Strategic Roadmap to Net Zero Ambitions

The move aligns with India's long-term vision outlined in previous climate pledges, including the Panchamrit commitments from COP26, which target 500 gigawatts of non-fossil energy capacity, 50 percent renewable energy in the mix, and a one billion tonne cut in projected emissions by 2030, culminating in net zero by 2070.

Carbon capture emerges as a core pillar here, offering a way to manage emissions that renewables alone cannot fully tackle in heavy industries.

A draft roadmap for CCUS adoption emphasizes its role in decarbonizing these areas, where alternatives like electrification remain limited.

Policymakers see it as a win-win, potentially turning captured CO2 into useful products such as chemicals, fuels, or even enhanced oil recovery from aging fields.

This approach not only curbs atmospheric pollution but also supports economic growth amid rising international scrutiny on emissions.

Challenges and Opportunities Ahead

While the funding injects momentum, experts point to hurdles like high upfront costs, the absence of widespread CO2 transport networks, and limited demand for captured carbon.

"India's commitment to CCUS is a game-changer for our industrial sectors. By providing this substantial funding and integrating it with emerging carbon credit mechanisms, we're creating a viable path to meet our net zero goals without compromising development," said Finance Minister Nirmala Sitharaman during the budget presentation.

Current projects, such as those at refineries, remain mostly at pilot scale, lacking the infrastructure for large-scale storage or utilization that exists in places like the US or North Sea.

Weak policy incentives and low carbon credit prices, expected below $20 per tonne initially, could slow private investment.

Yet, the budget's clarity sends a strong signal to global investors, positioning CCUS as national strategy rather than mere aspiration.

Linking it to the new Carbon Credit Trading Scheme could generate additional revenue, making projects more attractive.

Geopolitically, this bolsters India's stance in climate talks, framing decarbonization as modernization.

In summary, India's $2.4 billion bet on carbon capture underscores its resolve to harmonize industrial prowess with environmental targets, though success hinges on overcoming infrastructure gaps and building robust markets.