Budget 2026: Centre announces ₹20,000 cr plan to scale carbon capture tech

Union Budget 2026: The Centre will launch a ₹20,000 crore scheme over five years to promote carbon capture technologies across power, steel, cement, refineries and chemical sectors

The Centre will launch a new scheme to promote carbon capture, utilisation and storage (CCUS) technologies, with an outlay of ₹20,000 crore over five years, Union Finance Minister Nirmala Sitharaman announced on Sunday.

 

Presenting the Union Budget for 2026-27, Sitharaman said the government aims to support CCUS technologies so that they can be scaled up and used widely across industries.

 

The CCUS scheme will cover five major emission-heavy sectors - power, steel, cement, refineries and chemicals. These industries are among the largest contributors to carbon emissions and are critical to India’s climate goals.

 

The government hopes that targeted incentives will help companies adopt cleaner technologies while continuing industrial growth.

 

India curbs power sector emissions

 

India has reduced emissions from electricity generation by speeding up the use of clean energy. This has helped offset rising coal use in the United States and kept global emissions growth in check, Reuters reported.

 

A report by the Centre for Research on Energy and Clean Air (CREA) said power sector emissions in India declined for the first time in 52 years. India, along with China, are the world’s largest coal users and together accounted for 93 per cent of the increase in carbon dioxide emissions over the decade ending in 2024.

 

China’s power sector emissions fell by 40 million tonnes of carbon dioxide equivalent (tCO2e), or 0.7 per cent, in 2025. In India, emissions from power utilities declined by 38 million tonnes of carbon dioxide equivalent (tCO2e), or 4.1 per cent, in the 11 months ending November.   

 

India advances carbon market framework: Economic Survey

 

India has made strong progress in building a carbon market framework, which is key to its climate mitigation strategy, according to the Economic Survey presented on Thursday.

 

The government introduced the Carbon Credit Trading Scheme (CCTS) in June 2023. The scheme works through two routes -- a mandatory compliance mechanism and a voluntary offset mechanism.

 

How the carbon credit system works

 

Under the compliance mechanism, energy-intensive sectors are covered through an emission intensity-based baseline-and-credit system. The initial focus is on industries such as cement, iron and steel.

 

Companies that perform better than their emission targets earn Carbon Credit Certificates (CCCs), measured in tonnes of carbon dioxide equivalent (tCO2e). These certificates can be traded on power exchanges. Firms that miss their targets must buy and submit equivalent credits.

 

"This framework leverages the existing Perform, Achieve and Trade (PAT) scheme infrastructure, gradually transitioning it into a fully operational compliance carbon market," the Survey said.