Union Budget 2026 Proposes Major Investment in Carbon Capture Technology
In a significant move toward climate action, Finance Minister Nirmala Sitharaman announced a substantial allocation of Rs 20,000 crore for Carbon Capture Utilisation and Storage (CCUS) technologies during her Union Budget speech on February 1, 2026. This five-year outlay represents a major governmental push to address carbon emissions through technological innovation.
Understanding Carbon Capture Utilisation and Storage (CCUS)
Carbon Capture Utilisation and Storage refers to a suite of technologies designed to reduce atmospheric emissions of carbon dioxide, a primary greenhouse gas driving global warming and climate change. According to the Department of Science and Technology, Government of India, the CCUS program aims to "reduce carbon emission by either storing or reusing it so that captured carbon dioxide does not enter the atmosphere."
The process typically involves:
- Capturing carbon dioxide emissions from industrial sources or directly from the air
- Compressing the captured CO2 into a liquid state
- Transporting it to suitable storage sites
- Either storing it permanently underground or utilizing it for industrial purposes
Globally, CCUS has gained traction with substantial investments from various governments. The European Union has allocated approximately $1.5 billion to CCUS projects through its Innovation Fund, while the Netherlands and Denmark have committed $7.3 billion and $1.2 billion respectively to similar initiatives.
India's Strategic Approach to CCUS Technology
India has been actively exploring CCUS technologies since 2018 through joint Research & Development collaborations with multiple countries. These efforts focus on identifying and prioritizing breakthrough technologies in CO2 capture, separation, storage, and value addition.
A 2022 NITI Aayog report emphasized the critical importance of CCUS adoption for India's energy transition. The report noted that even with ambitious renewable energy targets of 500 GW installed capacity by 2030, India would still require baseload power from fossil fuels like coal due to the intermittent nature of solar and wind power.
The think tank highlighted that CCUS plays a "critical role for India to halve CO2 emissions by 2050 and accomplish net-zero by 2070." Net zero refers to achieving a balance where greenhouse gas emissions are reduced to levels that can be completely neutralized through natural or artificial absorption methods.
The Global Debate: Challenges and Criticisms of CCUS
Despite growing interest, CCUS technologies face significant criticism regarding their cost, viability, and implementation challenges. The NITI Aayog report acknowledged that "the economics of CCUS cluster projects in the initial years is quite challenging due to lower CO2 volumes and the outsized infrastructure created."
Several concerns have been raised globally:
- Limited Operational Scale: Only about 40 operational CCS projects existed globally in 2023, capturing approximately 45 metric tonnes of CO2 annually—a minuscule amount compared to China's 2021 emissions of 12,466.32 metric tonnes.
- Market Limitations: A 2023 London School of Economics report noted that the amount of CO2 needing capture for meaningful emission reductions far exceeds current market demand for CO2 utilization.
- Fossil Fuel Prolongation: Critics argue that CCUS could be used to extend fossil fuel dependence rather than accelerate the transition to renewable energy, potentially allowing coal and gas operations to appear "greener" without fundamental changes.
Professor Tianyi Ma, a Distinguished Professor in Chemistry and Renewable Energy, offered a balanced perspective in The Conversation, stating that while CCUS was "invented by the oil and gas industry," it still has a place in comprehensive climate strategies. He cautioned that "we must avoid using it to prop up fossil fuels" while acknowledging its necessity for hard-to-abate industrial sectors.
The Union Budget's substantial investment in CCUS reflects India's dual commitment to economic development and climate responsibility. As the world continues its energy transition—largely driven by China's massive renewable investments—technologies like CCUS will likely play an increasingly important role in achieving global climate targets while managing practical energy needs.
