Budget 2026: Carbon Capture, Utilisation, and Storage in hard-to-abate sectors to gain momentum with ₹20,000-cr outlay
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Union Finance Minister Nirmala Sitharaman allocated ₹20,000 crore over the next 5 years to reduce carbon emissions by hard-to-abate sectors such as power, steel, cement, refineries and chemicals in the Union Budget for 2026-27.
''Aligning with the road map launched in December 2025, Carbon Capture, Utilisation and Storage (CCUS)technologies at scale will achieve higher readiness levels in end-use applications across five industrial sectors, including, power, steel, cement, refineries and chemicals. An outlay of ₹20,000 crore is proposed over the next 5 years'', she said in her budget speech.
The allocation represents a significant transition from climate intent to execution. By prioritising CCUS deployment across hard-to-abate sectors such as power, steel, cement, refineries and chemicals, the government has laid the groundwork for industrial decarbonisation at scale, said Manish Dabkara, Chairman and Managing Director, EKI Energy Services and President Carbon Markets Association of India.
Recently, the NITI Aayog released three reports on decarbonisation roadv maps for cement, aluminium and MSME sectors, prepared in consultation with line ministries/ departments, industry stakeholders, research institutions and knowledge partners. The report says cement production is likely to increase sevenfold to 2,100 million tonnes in 2070, from the level of 391 million tonnes in 2023. Under the decarbonisation strategy, the cement sector must reduce its carbon intensity from 0.63 tCO₂e per tonne of cement to approximately 0.09-0.13 tCO₂e per tonne by 2070.
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Similarly, aluminium production is projected to increase from 4 million tonnes in 2023 to 37 million tonnes by 2070. The decarbonisation roadmap identifies three phased solutions - transition to Renewable Energy-Round the Clock (RE-RTC) power and enhanced grid connectivity in the short term, adoption of nuclear power in the medium term, and long-term integration of CCUS.
Manish Dabkara said the Budget announcement, further reinforced by complementary measures supporting critical minerals, domestic manufacturing, and energy security, strengthens the foundations of India’s emerging carbon markets by improving project viability, enabling credible emissions reduction pathways, and attracting private capital into climate solutions. The Budget positions sustainability not as a constraint on growth, but as an enabler of competitiveness, industrial resilience, and long-term economic stability; an approach that will be vital as India advances toward its net-zero ambitions, he added.