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Picture Courtesy: Indian Express

Context:

Union Budget’s allocated ₹20,000 crore for next five years on carbon capture, utilisation and storage (CCUS).

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

Carbon Capture, Utilisation and Storage (CCUS) is a group of technologies that aim to reduce greenhouse gas emissions by capturing carbon dioxide generated from industrial processes and power generation and either storing it safely underground or converting it into economically useful products. 

Key Components of CCUS

Carbon Capture: Carbon dioxide is separated from exhaust gases released during activities such as cement manufacturing, steel production, power generation, refining, and chemical processing using chemical, physical, or advanced material-based techniques.

Carbon Transportation: The captured carbon dioxide is compressed and transported through pipelines, ships, or road-based systems to designated utilisation or storage sites in a controlled and monitored manner.

Carbon Utilisation: The captured carbon dioxide is reused as a raw material for producing chemicals, synthetic fuels, building materials, and other value-added products, thereby promoting a circular carbon economy.

Carbon Storage: Carbon dioxide is injected deep underground into suitable geological formations such as depleted oil and gas reservoirs or saline aquifers, where it can be securely stored for long durations. 

Importance of CCUS:

Decarbonising hard-to-abate sectors: CCUS is essential for industries like cement and steel where a major portion of emissions arises from inherent chemical reactions rather than from fuel combustion alone.

Supporting climate commitments: CCUS plays a critical role in achieving long-term climate targets, including India’s net-zero emissions goal, as global mitigation pathways indicate that deep decarbonisation is not feasible without it.

Balancing growth and sustainability: CCUS enables continued industrial and infrastructure expansion while limiting the growth of carbon emissions, especially in developing economies.

Enhancing global competitiveness: The adoption of CCUS helps industries reduce carbon intensity and remain competitive in international markets facing carbon-related trade measures.

Budgetary support for Carbon Capture and Storage:

Government of India has allocated ₹20,000 crore over the next five years to support the development, demonstration, and scale-up of Carbon Capture, Utilisation and Storage (CCUS) technologies.

Rationale behind the budget support: The budgetary push for carbon capture reflects recognition that CCUS is essential for reducing emissions from sectors where decarbonisation through renewable energy alone is difficult, particularly in steel, cement, power, refineries, and chemicals. These industries contribute significantly to India’s CO₂ emissions and face challenges in cutting carbon because much of their emissions stem from process-related reactions rather than fuel combustion alone.

Bridging the technology gap: Although CCUS technologies have existed for decades, their large-scale deployment has been limited due to high costs, insufficient investment, and technical challenges in moving from lab-scale innovations to commercial applications. Many promising technologies developed through Indian research institutions require field testing, demonstration and scaling up to achieve readiness levels suitable for industrial adoption. The budget allocation is designed to provide this critical investment, helping technologies evolve from demonstration to commercial viability.

Supporting India’s climate goals: India has pledged to achieve net-zero emissions by 2070, a target that most global climate pathways indicate cannot be met without significant CCUS deployment. With emissions expected to grow in the near and medium term because of infrastructure and industrial expansion, CCUS becomes an important tool to balance economic growth with emissions reduction.

Economic and trade benefits: In addition to environmental gains, CCUS can help Indian industries remain competitive in global markets, particularly in regions implementing carbon-related trade measures such as the EU’s Carbon Border Adjustment Mechanism (CBAM). Lowering embedded carbon through CCUS adoption can reduce tariff risks and protect export competitiveness.

Institutional and Policy Framework

India has already begun laying the groundwork for CCUS deployment by:

• Mapping potential capture hubs and geological storage sites,
• Establishing Centres of Excellence in premier institutions,
• Formulating a national R&D roadmap identifying technology, finance, and policy barriers.

The budgetary support aims to align public investment with these institutional efforts, fostering an ecosystem where research can translate into commercial solutions. 

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

• Environmental benefits: Carbon Capture, Utilisation and Storage (CCUS) can reduce 90–95% of CO₂ emissions from industrial point sources, making it one of the most effective mitigation tools for hard-to-abate sectors, while globally about 50 million tonnes of CO₂ are already being captured annually, demonstrating technical feasibility despite limited scale. 

• Economic benefits: According to international energy assessments, scaling CCUS could create a multi-billion-dollar carbon management market, and in India, budgetary support of ₹20,000 crore over five years is expected to crowd in private investment, reduce future climate-related economic risks, and support infrastructure-led growth without sharply increasing emissions. 

• Industrial benefits: In industries such as cement and steel, nearly 60–70% of emissions are process-related, meaning CCUS is often the only viable decarbonisation pathway, as demonstrated by pilot projects in Indian cement plants where captured CO₂ is being used for concrete curing and mineralisation. 

• Trade benefits: With the European Union’s Carbon Border Adjustment Mechanism (CBAM) expected to impose carbon-linked costs on imports, CCUS adoption can help Indian exporters lower embedded emissions and avoid potential losses estimated to affect billions of dollars’ worth of steel and cement exports. 

Challenges in implementing Carbon Capture, Utilisation and Storage (CCUS):

High cost of carbon capture: Carbon capture remains capital- and energy-intensive, with global estimates indicating capture costs ranging from $40 to $120 per tonne of CO₂, making large-scale deployment financially challenging without sustained public support or carbon pricing.

Energy loss: CCUS systems consume 15–30% additional energy in power and industrial plants, reducing overall efficiency and increasing operational costs, particularly in energy-intensive sectors like steel and cement.

Scaling from pilot to commercial level: Many CCUS technologies in India have proven successful at laboratory or pilot scale but face engineering and financial barriers when scaled to capture 100–500 tonnes of CO₂ per day, which is necessary for commercial viability.

Transport and storage infrastructure deficit: India currently lacks a dedicated CO₂ pipeline network, and large-scale storage requires extensive geological surveying, monitoring, and long-term infrastructure investment.

Storage safety and long-term liability: Concerns persist regarding potential CO₂ leakage, induced seismicity, and unclear responsibility for monitoring and liability over decades or centuries, discouraging private sector participation. 

Government Initiatives on Carbon Capture, Utilisation and Storage (CCUS):

National CCUS research and development roadmap: The Department of Science and Technology (DST) has released a CCUS R&D roadmap up to 2030, identifying technological gaps, financing needs, and policy bottlenecks to accelerate indigenous development and deployment.

Establishment of Centres of Excellence: Dedicated Centres of Excellence on CCUS have been set up in leading scientific institutions to promote advanced research in capture materials, storage safety, and CO₂ utilisation pathways suited to Indian conditions.

Support for pilot and demonstration projects: The government has facilitated pilot-scale CCUS projects in cement, steel, and chemical plants to test feasibility, reduce costs, and improve technology readiness levels before large-scale commercial deployment.

Mapping of CO₂ storage potential: Government-supported scientific studies have identified potential geological storage sites, including depleted oil and gas fields and deep saline aquifers, to assess India’s long-term carbon storage capacity. 

Global Initiatives:

• Countries such as the United States, Canada, and Norway have operational large-scale CCUS projects, with the US alone accounting for the highest number of commercial facilities and capturing tens of millions of tonnes of CO₂ annually, supported by fiscal incentives and tax credits. 

• The European Union has integrated CCUS into its long-term decarbonisation strategy, supporting industrial hubs for shared CO₂ transport and storage infrastructure while linking CCUS adoption with climate targets and carbon pricing mechanisms.
• International Energy Agency (IEA): The International Energy Agency provides global assessments, scenarios, and policy guidance on CCUS and highlights it as indispensable for achieving global net-zero emissions, especially for hard-to-abate industrial sectors. 

• World Bank: World Bank provides concessional loans, guarantees, and blended finance to lower the high upfront costs of CCUS projects, especially in developing countries where commercial capital is reluctant to invest due to long payback periods.

It advises countries on designing regulatory frameworks covering CO₂ transport, storage rights, monitoring, reporting, verification (MRV), and long-term liability. 

Way Forward:

• Scale from pilots to commercial projects: India should focus on scaling CCUS from pilot facilities to commercial plants capable of capturing 100–500 tonnes of CO₂ per day, as global experience shows that costs decline by 20–30% once technologies move beyond demonstration stages. 

• Establish a robust regulatory and liability framework: Clear rules on CO₂ ownership, storage rights, long-term liability, and monitoring are essential, as seen in Norway, where a well-defined legal framework enabled projects like Sleipner, which has safely stored over 20 million tonnes of CO₂ since the 1990s. 

• Strengthen financial incentives and carbon markets: Introducing blended finance, viability gap funding, and carbon pricing can improve project economics, similar to the United States, where tax credits have helped make CCUS commercially viable and support capture of tens of millions of tonnes of CO₂ annually. 

• Develop industrial CCUS hubs: Creating shared CO₂ transport and storage infrastructure in industrial clusters can significantly reduce costs, as demonstrated by the Northern Lights project in Europe, which offers common storage infrastructure for multiple emitters across countries. 

• Promote indigenous and low-cost technologies: India should accelerate domestic R&D on capture materials and utilisation pathways, as Indian cement plants have successfully piloted CO₂-based concrete curing, reducing emissions while improving material strength. 

Conclusion:

Carbon Capture, Utilisation and Storage is indispensable for decarbonising India’s hard-to-abate sectors such as steel and cement, where emissions arise from core production processes. With targeted budgetary support, supportive regulation, and learning from global case studies, CCUS can bridge the gap between economic growth and climate commitments, making it a key enabler of India’s net-zero by 2070 transition. 

Source: Indian Express