Budget 2026: CCUS push with Rs 20,000 crore outlay to help decarbonize hard-to-abate sectors

The Union Budget’s Rs 20,000 crore incentive for carbon capture utilisation and storage (CCUS) in the FY27 budget will augment India’s efforts to decarbonize hard to abate sectors such as power, steel, cement and refineries.

It will also support emissions reduction in sectors such as iron and chemicals, as well as emerging areas including coal gasification and green hydrogen. The aim is to scale up the technology across five key industrial sectors, including power, cement, refinery, steel and chemicals.

“The Rs 20,000 crore, five-year outlay for CCUS across power, steel, cement, refineries and chemicals will accelerate decarbonisation and help protect export competitiveness amid CBAM,” Anujesh Dwivedi, partner, Deloitte India said.


CCUS is a technology that captures carbon dioxide emissions from large industrial sources such as power plants, steel plants, and cement factories. This comes as coal remains one of the main sources of energy in these sectors.

The aim is to scale up the technology across five key industrial sectors, including power, cement, refinery, steel and chemicals.

Though India’s per capita carbon dioxide emissions are about 1.9 tonnes per year, which is less than 40% of the global average.

However, it is the third largest emitter in the world after China and the US, with estimated annual emissions of about 2.6 gigatonne per annum (gtpa), according to a joint report from the NITI Aayog and MN Dastur & Co in 2022.

India needs a sustainable solution for the decarbonization of sectors that contribute to 70% of emissions, it had said.

ET had in January and last September reported that the CCUS program will be supported with around Rs 19,500 crore from the government.

The program may be implemented in phases, and the first phase could be for a period of six years, the report stated.

While the CCUS technology remains capital intensive at present, costs are expected to decline with scale and wider deployment, industry experts said.

The technology particularly works in India, where coal-based power plants continue to play a central role in the energy mix as well as in captive consumption of hard-to-abate sectors.

With the country planning to add nearly 105 GW of coal-based capacity by 2035 to meet rising base load demand, CCUS is seen as key in balancing energy security with climate goals.

India has committed to reducing its carbon emissions intensity by 50% by 2050 and achieving net zero emissions by 2070.

“The scheme is likely to have multiple sub-schemes, some of which could receive 100% government funding,” a government official had earlier told ET.

Semi commercial CCUS projects may be fully funded by the government, while laboratory scale projects could receive partial financial support.