Wedoany.com Report on Feb 2nd, India's latest federal budget places carbon capture technology at the core of its industrial climate strategy, announcing an investment of 200 billion rupees (approximately $2.4 billion) over the next five years to accelerate the application of carbon capture, utilization, and storage in heavy industries. This funding aims to propel related projects from the demonstration phase towards large-scale commercialization.
The plan focuses on high-emission sectors such as steel, cement, power, refining, and chemicals. By providing public funding support, the government indicates that deep emission reductions in these industries require managing carbon emissions, not just avoiding them.
While presenting the budget to parliament, Finance Minister Nirmala Sitharaman stated, "In the context of developments in international carbon pricing mechanisms like the EU's Carbon Border Adjustment Mechanism, supporting carbon capture technology helps achieve a balance between emission reduction and maintaining industrial output."
India's work in the carbon capture field did not begin with this budget. Since 2018, the country has participated in several international research collaborations, exploring new methods for carbon dioxide capture, separation, storage, and utilization, aiming to accumulate technical knowledge and reduce costs.
The policy thinking continues to evolve. Strategic documents such as the "India Carbon Capture, Utilization and Storage Policy Framework and Deployment Mechanism" released in 2022 position carbon capture technology as a complementary tool to renewable energy, especially in areas where fossil fuels still provide stable energy.
In 2025, the cement industry launched a series of carbon capture and utilization testbed projects. Led by the Department of Science and Technology, this initiative transforms high-carbon-emission industries into testing grounds for practical solutions, helping to accumulate local expertise and performance data.
Carbon markets could become an additional driver for India's carbon capture technology. The Bureau of Energy Efficiency has included carbon capture within the scope of its carbon credit trading scheme, laying the groundwork for future recognition of emission reductions from capture projects.
Currently, India's carbon market primarily rewards improvements in emission intensity and various offset activities. A complete system specifically granting credits for capturing and storing carbon is still under development. If robust monitoring and verification rules are implemented, carbon capture projects could obtain tradable credits, thereby improving their economics and attracting private investment.
The $2.4 billion budget commitment, combined with potential credit revenue, could shape new business models for carbon capture in India's harder-to-abate industries, supporting the country's goal of achieving net-zero emissions by 2070.
