… Authored by Sugandha Somani Gopal (Partner), Asmita Maan (Senior Associate), Vihaan Pathak (Associate), JSA Advocates & Solicitors
On February 01, 2026, the Government of India presented the Union Budget 2026–27 (“Budget”), highlighting the policy and fiscal framework for the upcoming financial year. Among other measures announced in the energy and climate change sphere, the Budget identified Carbon Capture, Utilisation and Storage (“CCUS”) as a key instrument for industrial decarbonisation. In her Budget speech, the Finance Minister, Nirmala Sitharaman, stated that, “aligning with the roadmap launched in December 2025, 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 five years.” This announcement sets out a clear, multi-year fiscal commitment for CCUS at the Union Budget level, marking a transition from policy recognition to an emphasis on deployment and industrial integration.
The Indian government has committed to achieving a carbon-neutral economy by 2070. In line with the same, CCUS has become increasingly important both nationally and globally as a climate change mitigation instrument. It enables the capture of carbon dioxide emissions from large industrial and energy-related sources, followed by their utilisation or permanent storage, thereby helping to mitigate emissions from hard-to-abate sectors while allowing continued operation of existing industrial infrastructure.
The Finance Minister indicated that the Budget allocation will be in line with the Research and Development Roadmap to enable India’s Net Zero Goals through CCUS (“CCUS Roadmap”), released by the Department of Science and Technology (“DST”) in December 2025. The CCUS Roadmap sets an ambitious target of capturing up to 750 million tonnes of CO₂ annually from hard-to-abate sectors by 2050, supported by a focus on indigenous technology development, demonstration projects, international partnerships and private investment.
This alignment signals an intent to address long-standing barriers to CCUS deployment in India, including gaps in technology readiness, cost viability and supporting infrastructure and regulatory clarity. Priority is likely to be accorded to identified onshore and offshore basins linked with high-emission sectors, including power, steel, cement, refineries and chemicals, to enable shared carbon dioxide (CO₂) transport and storage infrastructure and scalable deployment across India’s major carbon sources.
In practical terms, the Budget allocation is expected to support integration of CCUS technologies in existing and new industrial facilities, alongside continued investment in research, optimisation and next-generation solutions across emission-intensive sectors such as power, steel, cement, refineries and chemicals.
Budget 2026 reflects a calibrated and pragmatic approach to India’s decarbonisation strategy by positioning CCUS as a transitional instrument within the existing energy framework. Rather than mandating an immediate displacement of carbon-intensive industries, the CCUS Roadmap and Budget allocation acknowledge the structural realities of India’s energy economy and the imperative of maintaining supply stability.
By promoting targeted investment and technological advancement in CCUS, the Budget facilitates emissions mitigation across hard-to-abate/emission-intensive sectors. Overall, the Budgets approach enables progress towards India’s domestic as well as international climate commitments, including its Net Zero Target, while preserving flexibility in how industries transition over time.
