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Context:

The Prime Minister, Shri Narendra Modi, shared an article on how carbon capture can power India’s next steel revolution, written by Union Minister Shri HD Kumaraswamy.

What is Carbon Capture, Utilisation and Storage (CCUS)?

Carbon Capture, Utilisation and Storage (CCUS) refer to a set of technologies designed to lower carbon dioxide (CO₂) emissions from power generation and industrial activities. The process involves capturing CO₂ at the source and either reusing it in productive applications or storing it securely in underground geological formations, thereby preventing its release into the atmosphere.

Key Components of CCUS:

1. Carbon Capture

CO₂ is separated from industrial exhaust streams generated in sectors such as cement, steel, power, refining, and chemicals. This is achieved through chemical absorption, physical separation, or advanced material-based technologies that isolate carbon before it enters the atmosphere.

2. Carbon Transportation

Once captured, CO₂ is compressed and moved to utilisation or storage locations through pipelines, ships, or road transport under regulated and monitored conditions to ensure safety and efficiency.

3. Carbon Utilisation

Captured CO₂ can be used as a feedstock to manufacture synthetic fuels, chemicals, construction materials, and other value-added products. This approach supports the transition towards a circular carbon economy.

4. Carbon Storage

For long-term disposal, CO₂ is injected deep underground into stable geological formations such as depleted oil and gas fields or deep saline aquifers, where it can remain securely trapped for extended periods.

Importance of Carbon Capture, Utilisation and Storage (CCUS):

• Supporting India’s industrial expansion: India is the world’s second-largest steel producer, with output exceeding 150 million tonnes annually, and aims to expand capacity to 300 million tonnes by 2030–31 and 500 million tonnes by 2047. As the steel sector alone contributes around 10–12% of national greenhouse gas emissions, CCUS can enable the production of low-carbon steel using existing infrastructure while cleaner technologies like green hydrogen scale up. 

• Ensuring energy security during transition: Coal continues to account for over half of India’s primary energy mix, making an immediate phase-out economically and socially challenging. CCUS allows the continued use of fossil fuels with substantially lower emissions, supporting a gradual and stable transition to cleaner energy systems. 

• Promoting a circular carbon economy: Captured CO₂ can be converted into methanol, synthetic fuels, chemicals, and construction materials, or used in Enhanced Oil Recovery (EOR). This transforms carbon from a waste product into an economic resource, creating new industrial value chains. 

• Protecting export competitiveness: Global trade is increasingly influenced by carbon regulations such as the European Union’s Carbon Border Adjustment Mechanism (CBAM). Industries adopting CCUS can reduce carbon intensity, helping Indian exports remain competitive and attracting climate-focused international investments. 

• Decarbonisation of high-emission industrial activities: Industries such as cement, steel, chemicals, and refining generate a large share of emissions from process-related chemical reactions, not just fuel use. Since these emissions cannot be eliminated solely by shifting to renewable energy, CCUS provides a practical pathway to significantly reduce their carbon footprint without disrupting production. 

Key constraints in expanding CCUS in India:

• High capital requirement and cost burden: CCUS deployment involves substantial investment in capture units, compression systems, transport networks, and storage facilities. The additional cost can significantly increase the price of electricity, steel, and cement, potentially affecting industrial competitiveness in both domestic and export markets. 

• Energy penalty and efficiency loss: Carbon capture processes require considerable energy, often consuming 15–25% of a plant’s generated power. This reduces overall efficiency and, in fossil-based systems, may lead to higher fuel use, partially offsetting emission reduction gains. 

• Transport and land constraints: India does not yet have a dedicated CO₂ pipeline network linking emission sources with storage locations. Developing such infrastructure requires large-scale land acquisition, which is challenging due to high population density, fragmented landholdings, and complex regulatory procedures. 

• Storage uncertainty and data gaps: Although India’s theoretical storage potential is estimated at hundreds of gigatonnes, there is limited site-specific geological mapping and risk assessment. Much of the potential lies in basalt formations such as the Deccan Traps, where long-term storage is technically more complex and less extensively demonstrated than in conventional sedimentary basins. 

• Environmental and safety concerns: Long-term storage requires careful monitoring to prevent leakage, groundwater contamination, or pressure-related geological disturbances. Even low-probability risks can affect public acceptance and delay project approvals. 

• Limited scope for CO₂ utilisation: Current industrial demand for CO₂ (e.g., beverages, dry ice, fire suppression) is very small compared to total emissions. Advanced utilisation pathways such as synthetic fuels or methanol production remain costly and often depend on complementary technologies like green hydrogen, which are still developing. 

• Policy and legal uncertainty: India lacks a clear framework defining ownership of storage sites, long-term liability, monitoring standards, and post-closure responsibility. Uncertainty over who bears the risk in case of leakage discourages private investment. 

Government initiatives related to CCUS:

Policy framework: The government, through NITI Aayog, has prepared a comprehensive national framework for CCUS deployment, outlining pathways for large-scale adoption, financing mechanisms, and sectoral priorities. The roadmap identifies cement, steel, power, and refining as key sectors for early implementation.

Integration with climate commitments: CCUS is recognised as an important tool in achieving India’s net-zero emissions target by 2070 and supporting its Nationally Determined Contributions (NDCs). It is also aligned with long-term decarbonisation strategies for hard-to-abate industries. 

Carbon Credit Trading Scheme (CCTS): India has notified a Carbon Credit Trading Scheme, which creates a domestic carbon market framework. CCUS projects can potentially benefit by generating tradable carbon credits, improving their financial viability. 

Pilot projects by public sector enterprises: Several public sector companies have initiated demonstration projects:

• NTPC has commissioned a CO₂ capture plant at its Vindhyachal thermal power station to convert captured CO₂ into methanol.
• Indian Oil Corporation (IOC) is working on CO₂ capture and utilisation technologies in refineries.
• ONGC is exploring the use of captured CO₂ for Enhanced Oil Recovery (EOR) in mature oil fields. 

Key interventions to boost CCUS implementation:

• Develop industrial CCUS clusters: India should adopt a hub-and-cluster model by identifying regions where emission-intensive industries such as steel, cement, refineries, and thermal power plants operate in close proximity (e.g., coastal or mineral-based industrial belts). Shared CO₂ transport pipelines and common storage facilities can significantly lower per-unit costs and improve project viability. 

• Strengthen market-based incentives: Integrating CCUS within the Carbon Credit Trading Scheme (CCTS) will allow industries to earn and trade carbon credits for captured and stored emissions. A predictable carbon price can create a stable revenue stream and improve the commercial attractiveness of CCUS investments. 

• Introduce targeted fiscal support: Given the high upfront investment, the government may design production- or performance-linked incentives for CCUS projects. Capital subsidies, accelerated depreciation, and interest support can help industries adopt capture technologies at scale. 

• Provide tax-based incentives for stored carbon: A policy similar to international models can offer tax relief or direct financial benefits per tonne of CO₂ captured and permanently stored or utilised, encouraging long-term investment and operational continuity. 

• Promote CO₂ utilisation pathways: Greater emphasis should be placed on Carbon Capture and Utilisation (CCU) by supporting the conversion of CO₂ into methanol, synthetic fuels, green chemicals, construction materials, and fertilizers. This approach creates revenue opportunities and aligns with India’s cost-sensitive industrial ecosystem. 

• Establish storage and safety standards: National agencies, including the Bureau of Indian Standards (BIS) and environmental regulators, should develop technical guidelines for site selection, injection practices, monitoring, verification, and risk management to ensure safe long-term geological storage. 

Conclusion:

Carbon Capture, Utilisation and Storage (CCUS) is a critical bridging solution for reducing emissions from energy-intensive and hard-to-abate sectors while supporting economic growth. Although challenges related to cost, infrastructure, and policy remain, strengthening regulatory support, market incentives, and technological innovation can enable its large-scale deployment. Integrated with renewable energy, green hydrogen, and carbon markets, CCUS can play a vital role in helping India achieve its long-term net-zero and climate commitments while ensuring a balanced and secure transition to a low-carbon economy.

Source: PIB