Historical Context: A Late Start in a Fast-Moving Global Landscape
India’s CCUS conversation is not new. Expert reports—from NITI Aayog to CEEW—have repeatedly argued that CCUS must be integrated into India’s long-term low-carbon pathway. But unlike Europe or the U.S., where large-scale CCUS began emerging nearly 20 years ago alongside carbon pricing, India has only moved from roadmaps to initial allocations in recent years.
This historical delay matters because it has created:
Technological dependency on global suppliers
High unit costs, as India lacks economies of scale
Missing industrial linkages needed to monetise captured CO₂
Regulatory uncertainty, making private players hesitant
The 2025-26 Budget acknowledges the need for capture and storage infrastructure, but omits the wider ecosystem required for CCUS to become economically viable and scalable.
Policy Framework: A Strategy Without a Market
Despite the sizable budgetary allocation, India still lacks a dedicated CCUS policy that integrates:
Liability frameworks (who owns CO₂ after capture?)
Long-term storage rights and regulation
Carbon pricing or market-linked incentives
Clear pathways for cross-sector CO₂ transportation
Procurement norms for low-carbon industrial materials
Countries like the EU leverage instruments such as the Carbon Border Adjustment Mechanism (CBAM) to enforce decarbonisation. India, however, risks building CCUS infrastructure without a market signal that guarantees industrial adoption.
Outcome:
CCUS remains a technology push initiative instead of a market pull transformation.
Infrastructure Gaps: Capture Exists, but Transport and Storage Don’t
India has 400–600 gigatonnes of potential CO₂ storage capacity in depleted oil fields, saline aquifers, and deep coal seams. Yet, there is no operational nationwide CO₂ transport infrastructure, such as:
Pipeline networks
Shipping terminals
Rail-based CO₂ logistics hubs
Industrial symbiosis zones for shared capture and storage
Without “hub-and-cluster” systems—like those built in the U.S. Gulf Coast, Norway’s Northern Lights, or the UK’s Teesside cluster—individual plants in India will face astronomically high per-ton capture costs.
The Budget mentions “testbeds” in cement and industrial clusters but stops short of:
Fully funding shared infrastructure
Creating national CO₂ storage basins
Mapping commercial liability zones for storage operators
Outcome:
The capacity to capture CO₂ may grow, but the capacity to move and store it safely does not.
Financing and Incentives: The Missing Risk-Sharing Mechanism
Experts estimate India will need $4.3 billion in catalytic public funding for early CCUS deployment. The Budget’s allocation, however, is skewed toward infrastructure without offering:
Viability gap funding (VGF)
Production incentives for CO₂-derived products
Tax incentives similar to the U.S. 45Q credit
Blended finance models for private investors
Carbon market integration
For hard-to-abate sectors with razor-thin margins—MSMEs in ceramics, foundry clusters, and cement grinding units—the absence of financial de-risking slows adoption dramatically.
Outcome:
CCUS remains too costly for large segments of India’s industrial base.
The Utilisation Gap: CCU Is Still an Afterthought
India has historically emphasised carbon capture and storage (CCS) rather than carbon capture and utilisation (CCU). But globally, utilisation is what provides the economic logic—turning CO₂ into:
Methanol, synthetic fuels, green hydrogen carriers
Building materials
Algae-based products
Fertilizer intermediates
Plastics and polymers
India’s Budget 2025-26 offers no explicit market incentives for CO₂-based products or circular-economy integration involving waste streams (e.g., shipbreaking, scrap metals, renewable plastics).
Without a utilisation ecosystem:
Captured CO₂ has no commercial value
Industries won’t adopt CCUS at scale
India misses global export opportunities in green materials
Domestic R&D remains underfunded and fragmented
Outcome:
A capture-only CCUS model cannot deliver decarbonisation at scale.
Technology and R&D: Fragmented, Import-Dependent, and Underfunded
India’s CCUS technology ecosystem still lacks:
Domestic manufacturing of capture equipment
Low-cost absorbents and sorbents
Breakthrough R&D in fuel synthesis
Public–private partnerships for pilot plants
Integration with India’s AI-enabled industrial monitoring systems
Because CCUS needs deep R&D (TRL 4–8) before commercialisation, the absence of a national CCUS innovation mission slows India’s progress compared to China, the U.S., and the EU.
Human Capital and Regulatory Training: The Invisible Gap
A missing—but critical—ecosystem component is human capability:
Regulatory experts to draft CO₂ liability norms
Engineers trained in CCUS operations
Risk assessment professionals
Safety auditors
Regional lab capacity to test CO₂ integrity
State-level capacity for CCUS permitting
Given your prior work on National Time Authorities, regulatory frameworks, and capacity building, this gap is especially central—India cannot build CCUS infrastructure on weak skills governance.
A Decarbonisation Architecture Still Under Construction
India’s ambition is clear—but ambition must be matched with architecture.
The future of CCUS in India will depend on:
1. Creating a national carbon management market
A market must reward industries for adopting CCUS—through pricing, credits, or preferential procurement for “low-carbon materials.”
2. Building transport + storage corridors
Like power grids, CO₂ must flow across states. India needs multi-state CO₂ trunk pipelines spanning steel belts, cement clusters, and coastal storage basins.
3. Scaling utilisation markets
Green methanol, synthetic fuels, and CO₂-based building materials must become viable industries, not demonstration projects.
4. Integrating CCUS with India’s industrial policy
In sectors such as:
Green hydrogen
Biofuels
Hard-to-abate MSME clusters
Refineries and ammonia plants
Shipping and aviation
5. Creating CCUS financing models for MSMEs
Cluster-based financing and shared capture units will be essential for MSMEs—given your deep engagement with MSME clusters and entrepreneurship models.
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