Budget 2026 has allocated ₹20,000 crore to support carbon capture, utilisation and storage (CCUS) projects over the next five years — effectively centre-staging the technology.

There is little doubt that CCUS works. The idea is incredibly simple: Capture carbon dioxide from stationary sources such as thermal power plants and cement factories, use whatever you can (to manufacture concrete, aerated drinks or bio-ethanol), and bury the rest — permanently — in underground traps such as depleted oil and gas reservoirs or abandoned mines.

The problem is not with technology, but the costs.

CCUS, in fact, refers to a suite of carbon-capture technologies — absorption using chemical solvents; adsorption using carbon dioxide “grab-and-hold” solids such as zeolites; separation using membranes; looping processes using calcium compounds, and more. Absorption remains the most widely used. The captured carbon is then transported for utilisation or burial.

Regardless of the technology deployed, CCUS imposes a penalty — it is, after all, an additional layer of expenditure.

The argument against CCUS is that it can, at best, be a marginal solution, given the high costs.

Why invest in CCUS, critics ask, when equivalent carbon reduction can be achieved more cheaply by purchasing carbon credits that fund emission-reduction projects elsewhere?

The argument in favour is straightforward: Climate change is a colossal threat that must be fought with every available weapon, marginal or not. As for costs, proponents point out that scale and technological improvement will bring them down.

The biggest criticism against CCUS is its small scale.

The Global CCS Institute, citing the London Register of Sub-surface CO₂ Storage, notes that about 380 million tonnes of carbon dioxide have been stored underground globally since 1996.

The institute estimates capture capacity could increase five-fold by 2030 — to 337 million tonnes per annum (mtpa) from 64 mtpa today — at a CAGR of about 40 per cent. Together with the announced projects beyond 2030, the capacity in the pipeline is 513 mtpa.

“While significant, it remains well short of the required deployment to meet climate agreements, and additional capacity expansion must be brought online,” the institute says in its Global Status of CCS 2025 report, released last October.

On the other hand

Though CCUS (or CCS, since the ‘U’ component is barely 10 per cent) has existed for decades, proponents argue it is gathering momentum only now. Give it time to mature and scale up, they say, and it will deliver.

Indeed, new technologies are emerging to rival solvent-based absorption. Mineralisation is one such alternative.

The process is simple: dissolve carbon dioxide in water to form a weak acid; inject this water into rocks — preferably basaltic formations. Elements such as calcium, magnesium and iron react with the carbon to form solid carbonates — essentially stone — that remain locked underground.

Companies working on mineralisation say the conversion may take about two years, but the carbon remains immobilised permanently.

The Indian scene

The government has effectively cast the die in favour of CCUS — though the distribution of the ₹20,000 crore allocation remains unclear.

The decision is pragmatic: the country has little option but to rely on coal-based power for some years more — around 80 GW of coal capacity is planned. CCUS is, therefore, seen as the principal pathway to neutralising emissions, even if it raises power cost.

Bengaluru-based Nauvata Energy Transition Enterprise, which provides engineering and project management services, largely to the oil and gas sector, is active in the CCUS consultancy space.

It is assisting HPCL in setting up a pilot CCUS project at Visakhapatnam. Its CEO, Baroruchi Mishra, says several oil and gas companies are evaluating similar initiatives.

Cost factor

The cost of a CCUS project depends on multiple variables — concentration of carbon dioxide at source, capture technology and distance to injection sites.

Mishra estimates that capturing carbon dioxide from coal flue gas in thermal power plants could cost $50–110 per tonne for retrofit installations, and less for new plants. Transportation costs vary by terrain — $15–20 per tonne for up to 1,500 km. Compression and injection may each add $5–10 per tonne.

At a thermal power plant, CCUS could impose a tariff penalty of ₹3.5–8 per kWh, Mishra says, though carbon credit revenues could soften the impact. Even so, without subsidies or technological breakthroughs, it is difficult to see CCUS being widely adopted at coal plants — buying offsets would be cheaper.

For cement plants, CCUS may be the only viable decarbonisation pathway. Carbon dioxide is emitted at two stages — calcination (conversion of limestone into lime) and fuel combustion in kilns. Even if kilns run entirely on renewable energy, calcination emissions are unavoidable. “It is chemistry, not energy,” Mishra says. Producing one tonne of cement emits 0.5–0.8 tonnes of carbon dioxide. Indian cement plants cumulatively emit 250–300 mtpa. Mishra advocates a carbon cess on cement to fund the creation of shared CCS infrastructure.

In sum, CCUS would have to compete with carbon offsets. It is dependent on heavy government subsidies or a rise in global carbon prices. Until then, its proponents would need to keep fingers crossed.

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Published on February 16, 2026