Incentives for Carbon Capture, Utilization, and Storage in India’s FY27 Budget
As India navigates the complex landscape of climate change and energy demands, the government is considering a significant initiative: offering incentives for carbon capture, utilization, and storage (CCUS) in the FY27 Budget. This strategy is crucial for decarbonizing hard-to-abate sectors such as power, steel, and cement—industries that substantially contribute to carbon emissions. As discussions progress, key stakeholders are optimistic about the potential impact of this initiative on India’s environmental and economic landscape.
The Financial Framework of the CCUS Programme
Recent reports indicate that the CCUS programme is projected to have a total size of ₹38,900 crore, with approximately ₹19,500 crore expected to be funded by the government. This substantial financial backing is vital for the successful implementation of the initiative. The remaining funding is anticipated to be sourced through bank loans and investments from multilateral institutions, highlighting a collaborative approach to financing this ambitious programme.
One of the interesting aspects of the CCUS initiative is its planned phased implementation. The first phase is expected to unfold over six years, allowing for systematic progress and adjustments based on real-world outcomes and technological advancements. This phased approach also encourages steady investment and stakeholder engagement across the various sectors involved.
Understanding Carbon Capture, Utilization, and Storage
At its core, CCUS is a technology designed to capture carbon dioxide emissions from large industrial sources, including power plants, steel refineries, and cement factories. The captured CO2 can then be utilized in various applications or stored underground, thereby helping to mitigate the greenhouse gases that contribute to climate change.
The technology presents a unique opportunity for India, especially given the country’s ongoing reliance on coal-based power plants. While the technology is currently capital-intensive, experts believe that production costs will decline as it becomes more widely adopted and scaled. This aligns well with India’s energy framework, wherein coal continues to serve as a critical component of the energy mix.
Addressing Challenges in Key Sectors
The potential for CCUS extends beyond traditional energy sources. It also encompasses sectors like iron and chemicals, and even emerging areas such as coal gasification and green hydrogen. This versatility makes CCUS an essential tool in reducing overall carbon emissions across multiple industries.
Additionally, with India planning to add nearly 105 gigawatts of coal-based capacity by 2035 to meet rising base load electricity demand, CCUS is being viewed as a balanced approach to achieving energy security while addressing climate goals. Industry officials emphasize that integrating CCUS technologies can allow for cleaner energy generation during a time of increasing demand.
Commitment to Climate Goals
India’s commitment to reducing carbon emissions is encapsulated in its ambitious targets: a 50% reduction in carbon emissions intensity by 2050 and achieving net-zero emissions by 2070. These targets necessitate innovative solutions like CCUS, as traditional methods of emissions reduction may not suffice.
As the government and industry stakeholders continue to deliberate on the implementation of CCUS incentives, the dialogue only intensifies. This initiative could serve as a cornerstone in India’s broader strategy for a sustainable, low-carbon future, proving beneficial not just for environmental goals but also for economic resiliency.
The focus on CCUS in the FY27 Budget highlights the government’s recognition of technological solutions as critical to meeting both national and global climate commitments. With the right support and investment, carbon capture technologies have the potential to revolutionize multiple sectors while contributing to a greener, more sustainable future for India.