In a bold push for industrial decarbonisation, the Centre announces a five-year plan to scale carbon capture, utilisation and storage (CCUS) tech in power, steel, cement, and more.
A â‚ą20,000 Cr Bet on Industrial Decarbonisation
Union Budget 2026 signals a serious step forward in India’s climate policy: a ₹20,000 crore scheme over five years to support Carbon Capture, Utilisation, and Storage (CCUS) technologies.
Finance Minister Nirmala Sitharaman confirmed the plan will cover five of the most emission-intensive sectors:
- Power
- Steel
- Cement
- Refineries
- Chemicals
“India must balance growth and climate goals—CCUS offers a pathway to do both,” said a senior climate policy advisor.
With these industries contributing a major share of national emissions, the scheme aims to accelerate the commercial readiness of carbon capture tech, once seen as too expensive or niche for large-scale use.
India’s Emissions Tipping Point
While the new scheme marks a shift toward industrial climate action, India is already seeing results in power sector emissions.
According to CREA:
- Power sector COâ‚‚ emissions fell by 38 million tonnes (4.1%) in 2025
- This is India’s first annual drop in power emissions in 52 years
- Alongside China, India accounted for 93% of global emissions rise (2014–2024)
This fall is largely thanks to clean energy ramp-up, which is now being complemented by carbon market mechanisms and CCUS integration.
A Carbon Market Taking Shape
Budget 2026 builds on earlier moves like the Carbon Credit Trading Scheme (CCTS), launched in June 2023, and now supported by a growing regulatory backbone.
Under the compliance route:
- Energy-intensive sectors operate under a baseline-and-credit system
- Firms beating targets earn Carbon Credit Certificates (CCCs), tradable on exchanges
- Underperformers must purchase credits, creating a real-time price signal for emissions
“This is not just policy—it’s market-based decarbonisation,” noted an energy economist.
“Linking carbon capture to CCCs could unlock capital and scale.”
The CCUS funding push is expected to dovetail with this market—potentially allowing companies to monetise emissions savings through credit trading, while modernising their production footprint.
Why CCUS? Why Now?
The government’s emphasis on hard-to-abate sectors reflects a strategic shift. While renewables decarbonise power, cement, steel, and chemicals remain carbon-heavy due to process emissions that clean energy alone can’t offset.
- CCUS can trap and reuse or store COâ‚‚ from industrial plants
- It enables decarbonisation without production cuts
- Global CCUS costs have dropped ~25% over the past five years, making adoption more feasible
India’s move aligns with global trends. In 2025, over 100 new CCUS projects were announced worldwide, with governments in the US, EU, and Japan offering direct support.
What to Watch Next
The â‚ą20,000 crore scheme is expected to include:
- Capital subsidies for pilot and scale-up projects
- Grants or viability gap funding for early-stage deployments
- Integration with carbon credit markets for financial viability
But key questions remain:
- How will projects be selected and monitored?
- Will private sector co-investment be mandated?
- Can state-run units lead by example?
As industrial emissions come under tighter scrutiny, CCUS deployment could define India’s pathway to its 2070 net-zero goal.
TL;DR
Budget 2026 launches a ₹20,000 crore plan to fund carbon capture technologies across five high-emission sectors, marking a strategic shift toward industrial decarbonisation. Combined with India’s maturing carbon credit market, the scheme aims to align climate targets with industrial growth.
AI summary:
- â‚ą20,000 crore allocated to promote CCUS across power, steel, cement, chemicals, refineries
- Aims to scale industrial decarbonisation alongside India’s clean power gains
- Complements India’s Carbon Credit Trading Scheme for market-linked emission reductions
- Supports hard-to-abate sectors where renewables fall short
- Policy shift positions CCUS as a tool for balancing growth with climate action
