🗞️ Why in News Union Budget 2026-27 allocated Rs 20,000 crore over five years for a Carbon Capture, Utilization and Storage (CCUS) scheme targeting India’s five hardest-to-decarbonise industrial sectors — power, steel, cement, refineries, and chemicals — as part of India’s roadmap to Net Zero by 2070.

What is CCUS?

Carbon Capture, Utilization and Storage (CCUS) is a set of technologies that capture carbon dioxide (CO₂) emissions at the point of production, before they enter the atmosphere, and either permanently store them underground or convert them into useful products.

The three-stage process:

Stage 1 — Capture:

  • Post-combustion capture: CO₂ removed from flue gases after fossil fuel combustion using chemical solvents (monoethanolamine/MEA) or membranes
  • Pre-combustion capture: Fuel converted to hydrogen + CO₂ before burning; CO₂ captured, hydrogen used as clean fuel
  • Oxyfuel combustion: Fuel burned in pure oxygen rather than air, producing highly concentrated CO₂ stream for easy capture
  • Direct Air Capture (DAC): CO₂ extracted directly from ambient air (most expensive; currently used in small-scale facilities in Iceland and USA)

Stage 2 — Transport: CO₂ compressed to liquid/supercritical state and moved via dedicated pipelines (existing oil pipelines can be repurposed), ships, or trucks to storage/utilization sites.

Stage 3A — Utilization (the “U” in CCUS):

  • CO₂ used as feedstock in industrial processes: urea fertilizer, methanol, synthetic fuels, concrete curing, beverage carbonation, enhanced oil recovery (EOR)
  • CCU (without storage): CO₂ recycled but eventually re-emitted — reduces but does not permanently eliminate the carbon

Stage 3B — Storage (the “S” in CCUS): CO₂ injected into geological formations at depths > 800 metres, where pressure and temperature conditions ensure it remains in supercritical state and does not escape. Key storage types:

  • Saline aquifers (largest global capacity — porous sedimentary rock filled with brine)
  • Depleted oil/gas fields (India has these in the Cambay Basin, Gujarat and KG Basin, AP/Telangana)
  • Basalt formations (Iceland and India’s Deccan Traps — CO₂ mineralizes into carbonate rock within years; safer than aquifers)
  • Coal seams (CO₂ adsorbs onto coal; can trigger methane release — coalbed methane)

Why Hard-to-Abate Sectors Need CCUS

“Hard-to-abate” sectors are industries where electrification or renewable energy substitution cannot fully eliminate CO₂ emissions because CO₂ is produced as an inherent part of the chemical process — not just from energy use.

Sector Why CO₂ Emissions Are “Process-Linked”
Steel Blast furnace converts iron ore (Fe₂O₃) using coke (carbon) → CO₂ is a chemical product of reduction, not just energy
Cement Calcination of limestone (CaCO₃ → CaO + CO₂) — CO₂ release is chemically unavoidable
Refineries Hydrotreating, catalytic cracking, hydrogen production all generate CO₂
Chemicals Ammonia synthesis (Haber-Bosch) uses natural gas as both energy and feedstock → CO₂ by-product
Power (coal) While coal can be replaced by renewables, transition will take decades; CCUS bridges the gap

India’s steel sector specifically:

  • India produced 152 million tonnes of crude steel in FY 2024-25 — world’s 2nd-largest producer (after China)
  • Steel accounts for 10–12% of India’s total greenhouse gas (GHG) emissions
  • National Steel Policy 2017 targets: 300 MT capacity by FY 2030-31; 500 MT by 2047
  • Green Steel Taxonomy (Ministry of Steel): Steel rated on stars (1–5) with 3–5 stars for below 2.2 tCO₂e per tonne of crude steel — CCUS is one pathway to achieve this rating
  • India’s steel plants predominantly use blast furnace–basic oxygen furnace (BF-BOF) route (80%+ output) which is more carbon-intensive than electric arc furnace (EAF) route. Transitioning to EAF requires scrap availability; India has limited scrap today.

India-Specific CCUS Challenges

1. Capital intensity and the electricity penalty: CCUS equipment raises power plant capital costs significantly and requires 15–25% extra energy to run the capture process — meaning power output drops or fuel consumption rises. This raises electricity cost by 60–80% for retrofitted plants, creating competitiveness concerns for Indian industry.

2. No dedicated CO₂ pipeline network: India lacks the pipeline infrastructure for CO₂ transport. Building it requires new regulatory frameworks (CO₂ is corrosive and requires different materials than natural gas pipelines). The Rs 20,000 crore Budget allocation would need a significant portion for pipeline/transport infrastructure development.

3. Geological assessment gaps: India lacks a comprehensive geological CO₂ storage atlas comparable to what Europe (EU GeoCapacity), USA (DOE storage atlas), or Australia has built. The Deccan Trap basalt formations are promising — CO₂ mineralizes rapidly in basalt — but detailed capacity estimation is incomplete.

4. Regulatory vacuum: No Indian law currently addresses liability for CO₂ leakage from storage sites. Questions remain: Who monitors injection sites for 1,000 years? Who bears liability if CO₂ leaks contaminate groundwater or re-enters atmosphere? These require new legislation.

5. Water consumption: Conventional solvent-based capture is water-intensive — competing with agriculture and industrial water demand in water-stressed regions.

Policy and Institutional Ecosystem

Budget 2026-27 provisions:

  • Rs 20,000 crore allocated as Viability Gap Funding (VGF) over 5 years — covering part of the capital cost premium to make CCUS commercially viable
  • Two National Centres of Excellence in Carbon Capture to be established (locations to be announced)
  • IIT Bombay and JNCASR, Bengaluru are lead research institutions

Mission Innovation CCUS Challenge (2018): India co-leads this international initiative under the Mission Innovation multilateral clean energy platform, targeting cost reduction of CCUS by 10x.

International comparisons:

  • Norway’s Sleipner project (North Sea, 1996): World’s first commercial-scale CO₂ injection into a saline aquifer; stores ~1 MT CO₂/year
  • USA’s 45Q Tax Credit: USD 85 per tonne CO₂ captured for permanent geological storage; USD 60 for utilization — has catalysed over 200 projects
  • EU Carbon Border Adjustment Mechanism (CBAM): From 2026, EU will charge levies on cement, steel, aluminium, fertilizer imports based on their carbon content — CCUS adoption by Indian exporters reduces CBAM exposure

UPSC Relevance

Prelims: CCUS (Carbon Capture, Utilization and Storage), hard-to-abate sectors (5: power/steel/cement/refineries/chemicals), Green Steel Taxonomy, National Steel Policy 2017 (300 MT by 2030-31), India’s steel rank (2nd largest), CBAM (Carbon Border Adjustment Mechanism, EU), Direct Air Capture, Saline aquifer storage, Basalt carbonation, Deccan Traps, Mission Innovation, 45Q Tax Credit (USA).

Mains GS-3: Climate change mitigation technologies; industrial decarbonization; India’s Net Zero roadmap (2070); green steel and carbon pricing; CBAM implications for Indian exports; role of government in financing clean technology transition (VGF model); Paris Agreement and NDC implementation.

📌 Facts Corner — Knowledgepedia

Budget CCUS Allocation:

  • Budget 2026-27 allocation: Rs 20,000 crore over 5 years (Viability Gap Funding)
  • 5 target sectors: Power, Steel, Cement, Refineries, Chemicals
  • India’s Net Zero target: 2070 (committed at COP26, Glasgow)

India Steel Sector:

  • India crude steel output FY25: 152 million tonnes — world’s 2nd largest (after China)
  • Steel’s share of India’s GHG emissions: 10–12%
  • National Steel Policy 2017: 300 MT by FY 2030-31; 500 MT by 2047
  • Green Steel threshold: below 2.2 tCO₂e per tonne of crude steel (3-5 stars)

CCUS Process:

  • Capture methods: Post-combustion (solvents/MEA), Pre-combustion, Oxyfuel, Direct Air Capture (DAC)
  • Energy penalty: 15–25% extra power required for capture operations
  • Cost impact on power: raises electricity cost 60–80% for retrofitted plants
  • Storage depth: Geological formations at >800 metres depth

Storage Types:

  • Saline aquifers (largest global capacity), depleted oil/gas fields, basalt formations, coal seams
  • Deccan Traps (India): CO₂ mineralizes into carbonate rock within years — fast and permanent
  • Indian sedimentary basins: Cambay (Gujarat), KG Basin (AP/Telangana)

Key Institutions and Policies:

  • Mission Innovation CCUS Challenge: Launched 2018; India co-leads
  • Two National Centres of Excellence in Carbon Capture (Budget 2026-27)
  • IIT Bombay + JNCASR Bengaluru: Lead CCUS research institutions
  • CBAM (EU): Carbon Border Adjustment Mechanism; affects Indian steel/cement/aluminium exporters from 2026
  • Norway Sleipner: World’s first commercial geological CO₂ storage since 1996; ~1 MT CO₂/year
  • USA 45Q: USD 85/tonne for permanent geological storage; USD 60 for utilization

Sources: Drishti IAS, AffairsCloud