India Positions Itself as a Leader in Carbon Capture Technology

India is making significant strides in carbon capture, utilisation, and storage (CCUS), positioning itself as a potential global leader in this crucial technology. The Indian government has allocated approximately ₹20,000 crore, equivalent to US$2.4 billion, in its Union Budget for 2026 to 2027 for a new CCUS scheme targeting heavy industry. This announcement marks a pivotal shift in India’s climate strategy, recognising that CCUS is essential for decarbonising its industrial sectors.

As the world’s third-largest emitter of greenhouse gases, India faces a unique challenge. Unlike many advanced economies that can decarbonise by reducing industrial activity, India relies heavily on sectors such as steel, cement, and power generation for its economic growth. For India to meet its climate goals while fostering development, CCUS is not merely beneficial; it is a necessity.

Recognising the Role of CCUS

The Indian government’s recent funding commitment underscores this reality. Finance Minister Nirmala Sitharaman highlighted the importance of CCUS in the national industrial policy, acknowledging that carbon intensity will increasingly influence competitiveness in global markets. As India prepares its industrial base for a future where emissions are monitored and regulated, CCUS provides a practical solution to bridge the gap between ambitious climate goals and operational feasibility.

Furthermore, global trade is evolving with the introduction of carbon border mechanisms, which impose costs on emissions-intensive materials. Indian exporters now face tangible financial risks, making CCUS an attractive investment rather than a distant aspiration. By integrating CCUS with its emerging Carbon Credit Trading Scheme, India is creating a framework that not only mitigates costs but also enhances compliance and market access.

Building a Strong Foundation for CCUS

India’s commitment to CCUS encompasses more than just funding. The country is actively addressing the crucial question of carbon storage. Recently, NTPC Limited collaborated with the Indian Institute of Technology Bombay to successfully complete the nation’s first carbon dioxide (CO2) storage test well in Jharkhand. This milestone, although modest in scale, is foundational for establishing a credible CCUS ecosystem.

Early assessments indicate that India has several regions with the potential to become CCUS hubs. These areas, characterised by industrial emissions and suitable geological formations, may host either standalone projects or clusters that serve multiple emitters. This clustering model is particularly advantageous, as it allows for shared infrastructure and reduced costs, mirroring successful CCUS developments in more established markets.

While India is at an early stage in its CCUS journey, it stands to benefit from the lessons learned by other countries. By adopting proven regulatory models and standardising project structures, India can avoid the pitfalls that have hindered earlier adopters. Strong central coordination and the involvement of major public-sector enterprises may accelerate progress once the necessary frameworks are established.

In addition to economic considerations, there is a geopolitical dimension to India’s CCUS strategy. As nations increasingly intertwine climate policy with trade, demonstrating credible decarbonisation pathways will enhance India’s leverage in international negotiations. By addressing industrial emissions without stunting development, India can reshape the narrative around climate action, presenting it as an opportunity for industrial modernisation rather than a constraint.

The potential for India to emerge as a global CCUS growth engine is considerable. With its rising industrial output and increasing climate pressures, the country offers a unique market for technology providers and developers. Once the necessary frameworks are in place, project pipelines could expand swiftly, driving down costs and enhancing domestic capabilities.

In the coming years, the challenge will be to transform ambition into tangible outcomes. Successful implementation of funding into projects, advancing storage assessments beyond pilot phases, and accelerating CO2 transportation planning will be critical. Coordination across various ministries, states, and industries will be essential, as CCUS requires a system-wide approach to achieve success.

India’s proactive stance on CCUS places it at the forefront of global climate strategies. As the nation integrates this technology into its industrial strategy, it not only addresses pressing environmental concerns but also positions itself as a model for other developing economies. The decade ahead will be crucial in determining how effectively India can navigate this transition, shaping both its industrial future and the global landscape of carbon management.