India’s Carbon Capture Push: Can CCUS Help Decarbonise Heavy Industry?

Carbon Capture, Utilisation and Storage could become an important part of India’s climate strategy, particularly for industries where cutting emissions is technically difficult. But high costs, infrastructure requirements and regulatory challenges could determine how quickly the technology scales.

India’s climate transition is entering a complicated phase. The country is rapidly expanding renewable energy, improving energy efficiency and investing in cleaner technologies, but some of its largest industrial sectors continue to depend heavily on fossil fuels.

Steel, cement, chemicals, refining and thermal power are among the sectors where reducing carbon dioxide emissions is particularly challenging. In such industries, simply replacing conventional energy with renewable electricity may not eliminate all emissions.

This is where Carbon Capture, Utilisation and Storage (CCUS) is increasingly attracting attention.

CCUS involves capturing carbon dioxide before it reaches the atmosphere, transporting the captured gas and either using it in industrial processes or storing it permanently in suitable geological formations. The technology can also include carbon removal approaches such as Direct Air Capture, although these remain considerably more expensive and are still at an early stage of development.

Why CCUS matters for India

India has set a long-term target of achieving net-zero emissions by 2070. At the same time, the country needs continued industrialisation, infrastructure development and economic growth.

This creates a difficult balancing act.

Industries such as steel and cement are essential to India’s economic development but are also among the sectors where emissions are difficult to eliminate completely. Cement production, for example, generates emissions not only from the energy required to operate plants but also from the chemical process involved in producing clinker.

Similarly, the steel industry faces significant challenges in moving away from conventional production methods.

CCUS could provide one additional pathway for reducing emissions from these sectors while allowing industrial production to continue.

It should not, however, be viewed as a replacement for renewable energy, electrification or energy efficiency. Instead, it is more useful as a complementary technology for emissions that are difficult or expensive to eliminate through other means.

From power plants to industrial clusters

The deployment of CCUS in India will require more than installing carbon-capture equipment at individual factories.

A complete system would need capture facilities, pipelines or other transportation networks, storage sites, monitoring systems and appropriate regulatory mechanisms.

This makes industrial clusters particularly important.

States such as Gujarat, Maharashtra and Tamil Nadu have large concentrations of industrial activity and could potentially provide suitable locations for developing shared carbon-management infrastructure. Concentrating projects geographically could reduce transportation costs and allow multiple industries to share common infrastructure.

A phased approach could therefore be more practical than attempting to deploy CCUS across the country simultaneously.

Existing high-emission facilities could initially be targeted for pilot and demonstration projects, while new industrial facilities could incorporate carbon-capture systems during their design and construction.

The biggest obstacle: Cost

Technology alone will not determine whether CCUS succeeds in India.

The economics could be an even bigger challenge.

Capturing carbon dioxide requires additional energy and equipment. Once captured, the gas must be compressed and transported before it can be utilised or stored. Developing storage infrastructure and monitoring it over long periods also involves significant investment.

For industries operating on tight margins, these additional costs could make large-scale adoption difficult without policy support.

Government incentives, grants, concessional financing and tax benefits could therefore play an important role during the early stages of deployment.

Private investment will also be necessary. Public-private partnerships could help distribute the financial and technological risks associated with large-scale CCUS projects.

Carbon markets and other mechanisms that place an economic value on emissions reductions could eventually provide additional incentives for companies to invest in carbon-management technologies.

Can captured carbon become a resource?

The “utilisation” component of CCUS could create another dimension to India’s carbon strategy.

Captured carbon dioxide can potentially be used as an input in the production of chemicals, synthetic fuels, construction materials and other industrial products.

This could create new markets around captured carbon while encouraging innovation in manufacturing and materials science.

However, utilisation should not automatically be treated as permanent carbon removal. The climate benefit depends on how the captured carbon is used, how much energy is required for the process and how long the carbon remains out of the atmosphere.

Permanent geological storage, where technically and environmentally appropriate, may therefore remain an important component of a large-scale carbon-management strategy.

Regulation will be critical

India will also need a clear regulatory framework before CCUS can expand significantly.

Questions around ownership of captured carbon, transportation standards, storage-site selection, long-term monitoring, liability and environmental safety will need clear answers.

Storage sites must be carefully assessed to minimise the possibility of leakage and other environmental risks. Monitoring systems will also be necessary to verify how much carbon has actually been captured and permanently stored.

A predictable regulatory environment would not only improve environmental safeguards but could also provide greater certainty for companies considering major investments.

Technology development cannot be ignored

CCUS remains an evolving field. Capture technologies differ depending on the industrial process, while the cost and efficiency of different approaches can vary substantially.

India therefore needs greater investment in research, demonstration projects and indigenous technology development.

Universities, research institutions, engineering companies and industrial firms can play complementary roles in reducing costs and adapting technologies to Indian conditions.

International cooperation could also help India access technical expertise, financing and lessons from countries already experimenting with large-scale carbon-management projects.

CCUS must not become an excuse to delay decarbonisation

Despite its potential, CCUS also needs to be approached carefully.

The technology can be energy-intensive and expensive. Its effectiveness depends heavily on the carbon source, capture efficiency, transportation system and final destination of the captured carbon.

There is also a risk that excessive dependence on carbon capture could delay investments in cleaner energy systems.

For India, the most effective approach is therefore likely to be a diversified climate strategy.

Renewable energy, energy efficiency, electrification, green hydrogen, cleaner industrial processes and carbon capture can all have different roles depending on the sector.

The priority should be to deploy CCUS where it provides a credible emissions-reduction pathway that other technologies cannot easily deliver.

What India needs next

For CCUS to move from discussion to large-scale deployment, India will need coordinated action on several fronts.

First, the country needs pilot projects that can demonstrate the technology under Indian industrial and economic conditions.

Second, common infrastructure should be explored in major industrial clusters to reduce transportation and storage costs.

Third, financial mechanisms must make early projects commercially viable without creating inefficient long-term dependence on subsidies.

Fourth, India needs clear rules covering carbon transportation, geological storage, monitoring, verification and liability.

Finally, research and development should focus on reducing capture costs and improving the efficiency of technologies suited to India’s industrial sectors.

A potential piece of India’s net-zero puzzle

Carbon Capture, Utilisation and Storage is unlikely to solve India’s climate challenge on its own. But dismissing the technology could also leave an important gap in the country’s decarbonisation toolkit.

For sectors where emissions are difficult to eliminate through renewable energy and electrification alone, CCUS could provide another pathway to reduce industrial carbon emissions.

The question for India is therefore not whether carbon capture should replace clean energy. It is how and where the technology can be deployed responsibly, economically and at sufficient scale.

If India can bring down costs, develop shared infrastructure, establish strong regulatory safeguards and encourage technological innovation, CCUS could become an important component of the country’s transition towards a lower-carbon industrial economy.

The success of that strategy will ultimately depend on ensuring that carbon capture complements — rather than competes with — the broader shift towards cleaner energy and more efficient production.