India has placed one of its biggest industrial climate bets yet — committing ₹20,000 crore over the next five years to scale up Carbon Capture, Utilisation and Storage (CCUS) — signalling a decisive shift from climate pledges to capital-backed execution in sectors that drive both growth and emissions.
The funding, aligned with the CCUS roadmap unveiled in December 2025, targets power, steel, cement, refineries and chemicals — industries that form the backbone of India’s economy but also account for a majority of its industrial carbon footprint.
The move comes as policymakers confront a hard truth: renewables alone cannot decarbonise heavy industry, where emissions arise from chemical processes intrinsic to production.
“The announcement of an outlay of ₹20,000 crore over the next five years for CCUS will boost deployment and technology development in India,” said Labanya Prakash Jena, Director, Climate & Sustainability Initiative (CSI). “CCUS is a necessary technology for decarbonising the industrial sector.”
From climate ambition to industrial reality
In cement manufacturing, nearly two-thirds of emissions come from limestone calcination — not fuel combustion. In steelmaking, carbon is central to ore reduction. Refineries and chemical plants generate large volumes of process CO₂ as part of fuel conversion.
As India builds infrastructure, housing and manufacturing capacity at scale, emissions from these sectors are set to rise sharply — even as renewable energy expands.
This makes CCUS not just a climate solution but an industrial necessity.
“For sectors such as steel, cement, refining and chemicals, CCUS is an essential enabler of emissions reduction while protecting competitiveness, investment and jobs,” said Atanu Mukherjee, President and CEO of Dastur Energy.
“Integrated thoughtfully with India’s power, fuels and hydrogen strategies, this funding can anchor CCUS as a scalable industrial system — supporting growth and decarbonisation together.”
From pilot projects to carbon corridors
India is no longer starting from scratch.
Public sector refiners are already running carbon capture pilots at hydrogen production units, where CO₂ separation is embedded in operations. Cement manufacturers are testing post-combustion capture from kiln exhaust streams. Coal gasification plants supplying fertiliser and chemicals are capturing high-purity carbon dioxide.
Several projects are also exploring utilisation routes — converting captured carbon into construction materials, synthetic fuels and industrial chemicals — while geological storage trials are underway in depleted oil and gas fields and deep saline aquifers.
What the ₹20,000-crore outlay now enables is scale.
Rather than isolated plant retrofits, the government is pushing for shared carbon infrastructure — common pipelines, compression hubs and underground storage reservoirs serving entire industrial clusters.
Global experience shows this hub-and-spoke model slashes costs and unlocks private investment by reducing risk.
Economics driving early adoption
Not all CCUS projects cost the same.
Capture is cheapest in hydrogen production, gasification and refining processes, where carbon separation already exists. Cement and steel remain more expensive — but costs are expected to fall rapidly as infrastructure is shared and volumes rise.
This is why early deployment focuses on industrial clusters rather than coal-based power plants.
Over time, analysts expect CCUS to follow the same cost-reduction curve seen in solar and wind energy.
Protecting growth — not slowing it
Beyond climate goals, CCUS is increasingly being framed as a competitiveness tool.
Carbon border taxes and green procurement standards in Europe and other markets threaten to penalise high-emission industrial exports. Without CCUS, Indian steel, cement and chemicals could face shrinking market access in the next decade.
“CCUS allows India to decarbonise without dismantling its industrial base,” Mukherjee said. “It preserves asset value while enabling low-carbon production at scale.”
Financing the green transition
Experts also see the CCUS push aligning with broader reforms to mobilise green capital.
“India’s Vikshit Bharat and green transition ambitions require massive capital allocation, and there is a clear shortfall in green financing,” Jena said.
He pointed to the government’s move to establish a High-Level Committee on Banking to rationalise credit flows toward green projects.
In this context, the proposed restructuring of Power Finance Corporation and REC, India’s two largest power lenders, could significantly boost financing for clean energy generation, transmission and emerging low-carbon technologies such as CCUS.
The road ahead
Until recently, CCUS in India remained largely experimental. The ₹20,000-crore commitment now shifts the sector from feasibility to commercial deployment — funding carbon hubs, storage reservoirs and industrial-scale capture projects.
If executed well, CCUS could become the backbone of India’s industrial decarbonisation — enabling economic expansion, protecting exports and delivering climate goals in parallel.
For India’s heavy industries, carbon capture is no longer a distant technology.
It is rapidly becoming the bridge between growth and a low-carbon future.