Budget 2026 Unveils ₹20,000 Crore CCUS Scheme to Accelerate Carbon Capture Technologies
In a significant move to bolster India's climate action efforts, Union Finance Minister Nirmala Sitharaman announced a comprehensive incentive scheme for carbon capture, utilization, and storage (CCUS) technologies during her Budget 2026 speech. The government has allocated a substantial outlay of ₹20,000 crore over the next five years to scale up these critical technologies and enhance their readiness levels across various industrial sectors.
Strategic Focus on Key Emission-Intensive Sectors
The CCUS initiative will specifically target five major sectors that contribute significantly to India's carbon footprint: power generation, steel manufacturing, cement production, petroleum refineries, and chemical industries. This targeted approach aims to address the most substantial sources of industrial emissions while supporting the country's broader environmental objectives.
Finance Minister Sitharaman emphasized that these incentives are designed to accelerate the development and deployment of CCUS technologies, enabling them to achieve higher technological readiness levels and become more viable for end-use applications. The scheme represents a crucial component of India's strategy to balance economic growth with environmental sustainability.
Industry Experts Welcome the Initiative
Suddhasatta Kundu, Director for Power Sector Advisory at Nangia and Co. LLP, highlighted the transformative potential of this investment. "The allocation of ₹20,000 crore for CCUS technologies over the next five years will significantly enhance readiness and end-use applications, particularly supporting blue hydrogen production for industries like steel and cement," he noted. This development is expected to create new opportunities for clean industrial processes while reducing carbon emissions.
Addressing India's Emission Challenge
According to data from government think tank NITI Aayog, India's power and industrial sectors accounted for approximately 1,600 million tonnes per annum of CO2 emissions in 2020, representing about 60% of the country's total emissions of 2,600 million tonnes. The remaining 40% originates from distributed sources such as agriculture, transport, and buildings, which present different challenges for carbon capture technologies.
A NITI Aayog report warns that emissions from these key sectors are projected to increase to nearly 2,300 million tonnes per annum by 2030, driven by economic expansion and rapid urbanization. This anticipated growth makes the capture and reduction of these emissions increasingly critical for India's climate commitments.
Supporting India's Ambitious Climate Goals
This CCUS initiative arrives at a pivotal moment in India's climate and energy transition journey. As the world's third-largest emitter of CO2 after China and the United States, with estimated annual emissions of about 2.6 gigatonnes, India has committed to reducing CO2 emissions by 50% by 2050 and achieving net-zero emissions by 2070.
While the expansion of renewable power capacity has been a notable success in India's clean energy transition, the power sector alone contributes approximately one-third of the country's total CO2 emissions. The gradual replacement of fossil-fuel-based power generation with renewable sources will continue to reduce emissions, but CCUS technologies offer an additional pathway to address emissions from hard-to-abate industrial sectors.
The Budget 2026 announcement demonstrates the government's recognition that multiple technological approaches will be necessary to meet India's climate targets while maintaining industrial competitiveness and economic growth.
