Union Budget 2026-27 and Carbon Capture Utilisation and Storage Technologies
India's Union Budget 2026-27 proposes a ₹20,000 crore allocation over five years for Carbon Capture Utilisation and Storage (CCUS) technologies, marking a pivotal shift toward reducing industrial emissions under its net-zero 2070 commitment. This aligns with the preventive versus curative environmental policy framework, emphasizing mitigation technologies rather than post-facto containment. However, scaling CCUS solutions presents significant financial, technological, and policy hurdles, which require critical examination in light of India's growing industrial footprint and the global climate agenda.
UPSC Relevance Snapshot
- GS Paper III: Environmental Conservation, Climate Change Mitigation, Industrial Policies
- GS Paper II: Governance, International Agreements and Treaties (Paris Agreement, SDGs)
- Essay Angle: "Balancing Industrial Growth with Environmental Sustainability" or "Technological Innovation for Climate Resilience"
Institutional Landscape
CCUS development in India operates within a framework of integrated policy and scientific governance, supported by public sector funding, private sector partnerships, and research institutions. Despite this, implementation is constrained by the absence of unified regulatory norms and commercial deployment strategies.
- Policy Frameworks: India’s net-zero pledge (Glasgow Climate Summit, 2021) and CCUS R&D roadmap (Department of Science and Technology, 2030).
- Implementing Bodies: Ministry of Environment, Forest and Climate Change (MoEFCC), IIT Bombay, Jawaharlal Nehru Centre for Advanced Scientific Research.
- Sectoral Targets: Steel, cement, refining, and chemicals—industries accounting for ~30% of national emissions.
- Research Allocations: Pilot projects in major industries and geological mapping for storage feasibility.
The Argument with Evidence
The significance of India's ₹20,000 crore CCUS push lies in addressing critical gaps in scaling technologies beyond laboratory trials to field-scale applications. While the Ministry of Finance anticipates technological deployment within five years, institutional evidence reveals cost challenges and limited industrial readiness.
- CAG 2023 Findings: Previous climate technology funds suffered utilization inefficiencies, deploying only ~60% of allocated budgets.
- Global Data: Only ~50 million tonnes of CO₂ annually captured globally (IEA), against emissions of ~40 billion tonnes.
- Domestic Production Context: India’s industrial CO₂ emissions rose by 10% from 2020 to 2025 (MoEFCC), with cement and steel leading contributors.
- Export Risks: EU’s Carbon Border Adjustment Mechanism (CBAM) likely to impose pricing penalties unless carbon intensity is reduced.
International Comparison: India vs Norway
Norway leads in CCUS implementation, with government-subsidized large-scale projects like "Northern Lights" under its net-zero target. India’s CCUS trajectory remains nascent, hindered by cost and readiness gaps.
| Metric | India | Norway |
|---|---|---|
| Annual CO₂ Captured (MT) | ~0.5 post-pilot projects | ~1.5 via commercial deployment |
| Funding Allocations | ₹20,000 crore (2026-31) | $2 billion (2020-25) |
| Technological Readiness | Pilot demonstration ongoing | Operational at large-scale |
| Policy Framework | R&D roadmap, sector-specific pilots | Integrated state-backed regulations |
Institutional Critique
While the ₹20,000 crore allocation is a step forward, systemic issues in India's climate governance could limit its impact. The Ministry of Finance has traditionally underfunded industrial emission mitigation projects, evident in the underperformance of the National Green Fund. Furthermore, the absence of legally binding CCUS deployment targets contrasts with Norway’s progressive regulatory framework. These gaps may reduce the commercial scalability of India's CCUS initiatives.
Second, institutional capacity-building remains insufficient. The International Energy Agency (IEA) highlights that real-world CCUS deployment requires trained personnel, robust geological mapping, and industrial integration—areas in which India lags compared to institutional peers such as Canada and Norway.
Counter-Narrative
Critics argue that a heavy reliance on CCUS technologies in industrial sectors might inadvertently slow progress towards renewable energy adoption. For instance, the World Resources Institute (WRI) contends that overemphasis on carbon capture strategies risks diverting funds from clean energy research, such as solar and wind. However, proponents counter that CCUS complements renewables by targeting emissions sources (such as cement) that are hard-to-abate through renewable energy alone.
Structured Assessment
- Policy Design Adequacy: The ₹20,000 crore allocation provides pilot-to-commercial funding, but lacks enforceable deployment targets or sector-specific incentives.
- Governance Capacity: Limited inter-ministerial coordination and resource utilization inefficiencies undermine scaling potential.
- Behavioural/Structural Factors: Resistance from industries due to perceived high costs and operational disruptions could limit adoption.
Practice Questions for UPSC
Prelims Practice Questions
- Statement 1: CCUS is primarily a reactive environmental policy.
- Statement 2: The Ministry of Finance's allocation for CCUS aims to enhance industrial emission reduction.
- Statement 3: CCUS technologies currently capture a significant portion of global CO₂ emissions.
Which of the above statements is/are correct?
- Statement 1: India's industrial CO₂ emissions rose by 10% from 2020 to 2025.
- Statement 2: Cement and steel are the leading contributors to India's emissions.
- Statement 3: India is the world's largest emitter of CO₂.
Select the correct statement(s)
Frequently Asked Questions
What is the significance of the ₹20,000 crore allocation for CCUS in India's Union Budget 2026-27?
The ₹20,000 crore allocation signifies India's strong intent to invest in technologies aimed at reducing industrial emissions as part of its net-zero commitment by 2070. This funding aims to bridge the gap between research and practical applications in critical sectors contributing to around 30% of national emissions.
What are the main challenges facing the implementation of CCUS technologies in India?
The implementation of CCUS technologies in India faces significant challenges, including financial constraints, technological readiness, and the absence of unified regulatory norms. Additionally, institutional capacity issues and inefficiencies in resource utilization limit the scalability of these technologies.
How does India's approach to CCUS compare to that of Norway?
India's approach to CCUS is still developing and lags behind Norway's, which has established large-scale, government-subsidized CCUS projects. Norway's effective regulatory framework and substantial funding allocations contrast with India's nascent efforts, highlighting the need for stronger institutional support in CCUS deployment.
What role do the Ministry of Environment, Forest and Climate Change and other institutions play in CCUS implementation?
The Ministry of Environment, Forest and Climate Change, along with institutions like IIT Bombay and Jawaharlal Nehru Centre, are pivotal in steering the CCUS agenda through research, policy formulation, and pilot projects. Their collaboration is crucial for overcoming technological and regulatory hurdles and achieving successful implementation.
What concerns do critics have regarding the reliance on CCUS technologies?
Critics worry that over-reliance on CCUS might detract from investments in renewable energy sources such as solar and wind. They argue that while CCUS has its place, it should not hinder the transition to clean energy, which is vital for achieving overall environmental sustainability.
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