Union Budget 2026-27 & Carbon Capture Utilisation and Storage (CCUS) Technologies

Syllabus: GS3/Environment

Context

• Recently, the Union Budget 2026-27 proposed an outlay of Rs 20,000 crore over the next five years in Carbon Capture Utilisation and Storage (CCUS) technologies.
• It is aligned with India’s long-term goal of achieving net-zero emissions by 2070, even as industrial activity and energy demand continue to grow in the near term.

What Are CCUS Technologies?

• Carbon Capture, Utilisation and Storage (CCUS) refers to a group of technologies that prevent carbon dioxide (CO₂) emissions from entering the atmosphere.
  • Capture: CO₂ released during industrial processes is separated and collected.
  • Utilisation: The captured CO₂ can be converted into useful products such as chemicals or fuels.
  • Storage: Alternatively, it can be stored safely for long periods in geological formations deep underground.

Why CCUS Matters for Climate Goals?

• Although CCUS technologies have existed for decades, their global deployment has been limited due to high costs, safety concerns and scaling challenges. 
• At present, only about 50 million tonnes of CO₂ are captured annually worldwide, less than 0.5% of the nearly 40 billion tonnes emitted each year.
  • The global net-zero targets are unachievable without large-scale CCUS deployment, especially as many countries struggle to sharply cut emissions from heavy industry.

India’s Growing Focus on CCUS

• Emissions are expected to rise in the short to medium term due to infrastructure development and industrial expansion.
• India has intensified efforts to develop indigenous CCUS solutions, since announcing its net-zero 2070 pledge at the Glasgow Climate Summit (2021).
• Key developments include:
  • Pilot and demonstration projects in steel, cement and chemical industries;
  • Mapping of potential large-scale capture and storage sites;
  • Establishment of Centres of Excellence, such as those at IIT Bombay and the Jawaharlal Nehru Centre for Advanced Scientific Research;
  • A CCUS R&D roadmap for 2030, released by the Department of Science and Technology (DST), identifying technological, financial and policy gaps;

Why Is the Budget Allocation Crucial?

• A major hurdle for CCUS has been the lack of funding for field-scale testing and deployment. While many technologies have proven effective in laboratories, scaling them up to real-world conditions involves high risks and costs.
• The ₹20,000 crore allocation is aimed at bridging this gap by improving the technology readiness levels of promising solutions.
• The meaningful impact requires technologies capable of capturing or storing 100–500 tonnes of CO₂ per day.
  • Multiple CCUS technologies to achieve commercial deployment in India within the next five years.

Economic and Industrial Benefits

• CCUS is especially important for industries like steel and cement, where emissions arise from fuel combustion and core production processes themselves.
  • In such cases, switching to renewable electricity alone cannot eliminate CO₂ emissions.
• The budget targets CCUS deployment in power generation, steel, cement, refineries, and chemical industries.
  • These sectors are among the largest contributors to India’s emissions.

Boosting Global Competitiveness

• Indian exporters are increasingly exposed to carbon-related trade barriers, such as the EU’s Carbon Border Adjustment Mechanism (CBAM).
  • Indian products can remain competitive in key international markets, by lowering their carbon footprint through CCUS.

Looking Ahead

• India could see commercial deployment of CCUS technologies within the next five years with targeted funding, clearer policy direction, and growing industrial interest.
  • The push promises technological leadership, industrial resilience, and long-term economic gains, beyond climate mitigation.
• India’s ₹20,000 crore on CCUS signals that achieving net-zero will require renewable energy, and heavy investments in technologies that deal directly with carbon emissions where they are hardest to eliminate.

Source: IE