The Union government is preparing to seek Cabinet approval by July for its ₹20,000 crore CCUS incentive scheme that targets a reduction in emissions in sectors such as thermal power, steel, cement, and refineries.

The Ministry of Power is spearheading the proposed scheme, one of the government’s measures to tackle emissions in the industrial sector, even as it continues to generate electricity from coal-based plants to meet rising demand. Inter-ministerial discussions are ongoing regarding the proposal.

The CCUS scheme was announced in the Union Budget 2026-27 and is anticipated to be executed within a five-year span. An initial amount of ₹500 crore is allocated for the current fiscal year to support research, pilot projects, and preliminary use of CCUS technologies.

Carbon capture, utilisation, and storage (CCUS) technologies entail capturing CO₂ emissions from industrial units for underground storage and reuse in other industries. According to the proposal, carbon captured by this technology will be used to produce green urea, sustainable aviation fuel, and building materials. Possible storage areas include exhausted oil and gas fields and geological formations close to industrial zones in Gujarat and Odisha.

This is amid growing international scrutiny on carbon-intensive sectors. Carbon-related charges on the import of Indian steel and cement have been expected from initiatives like the EU’s Carbon Border Adjustment Mechanism (CBAM). The government expects that the initiative will help cut emissions from export-oriented industries.

India has pledged to become net zero by 2070 in line with its climate ambitions. Meanwhile, the growth of thermal power capacity has played a key role in meeting the country’s growing energy demands. This initiative is expected to play a key role in reducing emissions from industrial sectors for which there is no alternative to the use of fossil fuels.
Following the National CCUS Roadmap of 2025, this is another initiative that is expected to be submitted to the Cabinet.