The Union Budget 2026–27 has set aside Rs 20,000 crore over the next five years to accelerate Carbon Capture, Utilisation and Storage (CCUS) technologies, marking one of India’s most significant policy pushes yet toward decarbonising its most emission-intensive industries.
Announced by Finance Minister Nirmala Sitharaman in Parliament on February 1, the allocation positions CCUS as a central pillar of India’s long-term climate strategy and aligns with the country’s commitment to achieve Net Zero emissions by 2070.
Bridging the gap between pilots and large-scale deployment
The funding is aimed at moving CCUS technologies beyond pilot and demonstration stages into commercially viable, large-scale systems. Power generation, steel, cement, refineries and chemicals sectors that together account for a large share of India’s industrial emissions are the primary focus.
“These sectors are among the hardest to decarbonise and currently lack cost-effective alternatives for deep emission reductions,” Sitharaman said, explaining that the investment is designed to raise both technological readiness and commercial feasibility in real-world industrial applications.
The Budget proposal builds on the national CCUS roadmap released by the Department of Science and Technology (DST) in December 2025, which outlines a long-term ambition to capture up to 750 million tonnes of carbon dioxide annually by 2050 from hard-to-abate sectors.
CCUS and India’s Net Zero 2070 pathway
CCUS refers to a suite of technologies that capture carbon dioxide emissions from industrial processes or power plants and either store them permanently in geological formations or utilise them in products such as fuels, chemicals or construction materials.
According to the DST roadmap, the strategy will prioritise indigenous technology development, commercial-scale demonstration projects, international collaboration and mechanisms to crowd in private investment. Operationally, CCUS systems involve capturing CO2 before or after combustion, compressing it and transporting it often via pipelines to storage sites such as depleted oil and gas fields or deep saline aquifers.
The Budget allocation signals that CCUS is no longer being treated solely as a research activity but as a strategic industrial system linked to India’s broader energy transition, including hydrogen and low-carbon fuels.
Global debate and industry response
Globally, CCUS remains a contested climate solution. Around 50 facilities are currently operational worldwide, capturing roughly 50 million tonnes of CO2 annually, with dozens more under construction. Supporters argue the technology is essential for sectors where electrification is not yet viable, while critics warn it could delay the transition away from fossil fuels and remains expensive at scale.
Indian industry experts have largely welcomed the Budget move as pragmatic. Abinash Mohanty of IPE Global said the allocation acknowledges the reality that certain industries cannot decarbonise rapidly without transitional technologies. Others stressed that success will depend on execution, particularly the development of shared CO2 transport and storage infrastructure, clear regulatory frameworks and support for early commercial projects.
For policymakers, the CCUS push reflects an effort to balance climate action with economic competitiveness. Steel, cement and chemicals are critical to India’s infrastructure growth, employment and exports. Supporting CCUS, the government argues, allows emissions to be reduced without undermining industrial expansion.
The Rs 20,000 crore commitment, analysts say, represents a shift in treating decarbonisation and industrial competitiveness as linked strategic priorities rather than opposing goals. If implemented effectively, it could help India build domestic expertise in a technology expected to play a role in global climate mitigation, while addressing emissions from sectors where solutions remain limited.