IEW 2026: India's CCUS adoption faces hurdles on weak incentives, policy support

India's adoption of carbon capture remains shaky, with limited demand, weak policy incentives and high capital costs constraining deployment as the country balances energy security with decarbonization, market participants told Platts at India Energy Week in Goa.

While the event showcased a myriad of global companies focusing on carbon capture, utilization and storage, most technology providers and companies looking into this space said the viability for CCUS adoption in India remains fairly limited owing to a lack of demand and policy push in the country.

"While technology has made certain things possible in the low-carbon space, [the] cost economics is still not feasible for India," Pankaj Jain, member secretary of the 8th Central Pay Commission, said during a panel on low-carbon solutions at IEW. "CCS [carbon capture and storage], we still have not cracked it -- our early pilots have not been doing well."

India's CCUS landscape is currently made up of a handful of sector-specific projects, such as Indian Oil's proposed CCUS project at its Koyali refinery in Gujarat, often cited as the country's largest, with a planned capacity of up to 13.7 million metric tons/year of CO₂ from hydrogen units for use in enhanced oil recovery. However, it remains pre-commercial.

Jindal Steel and Power's Angul plant in Odisha hosts one of the largest operational capture units, handling about 2,000-3,000 mt/day of CO₂ from coal gasification for downstream utilization in fuels and chemicals, while Tata Steel's Jamshedpur facility captures about 5 mt/d, serving as a pilot to build technical capability in steelmaking.

Despite the growing list of pilots and announcements, CCUS in India remains far from commercial scale, market participants said, as most projects are stand-alone capture units without access to shared CO₂ transport or storage infrastructure, which pushes up costs and limits scalability.

"Unlike markets such as the US or North Sea, India lacks established CO₂ pipeline networks or licensed storage hubs, forcing projects to rely on limited utilization options," said Vishal Pawar, associate director of process and SAE at Aker Solutions, which Equinor has awarded with a significant contract for Norway's Northern Lights CCS Phase 2 project.

Norway's Northern Lights CCS facility is one of the world's largest open-access carbon transport and storage projects, designed to receive liquefied CO₂ from industrial emitters across Europe and permanently store it beneath the North Sea.

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End-user demand missing

End-user demand for captured CO₂ remains weak, as utilization options are limited and costly, while permanent storage adds significant expense with no clear offtake or revenue certainty for project developers.

"In India, the major issue is that we are not able to find utilization of CO₂, as there is absolutely no consumption of it," Pawar said. "The only possible high-scale utilization is sequestration, which is a very costly affair."

While numerous pilot projects have been announced, many CCUS projects struggle to move beyond pilot scale, with developers reluctant to commit capital in the absence of assured buyers or policy-backed demand, according to a Mumbai-based technology provider for CCUS projects.

"There is no market, so they are not incentivized to do it," the provider said. "Some players are looking at setting up CCUS, but the liquidity in terms of projects is very low."

Lack of carbon pricing incentive, policy push

The absence of a clear carbon pricing signal in India also undermines the business case for CCUS, as emitters have little financial incentive to invest in a capital-intensive technology when the cost of emitting CO₂ remains largely unpenalized.

Although India is slated to kick off its compliance carbon mechanism from 2026, the market largely expects the price of credits generated by the scheme to be in the sub-$20/metric ton of CO₂ equivalent range.

"I think even $20/mtCO2e is high at this point given the lenient targets in the first stage," said a natural gas distributor, who agreed onthe challenges any low-carbon solution provider would face. "Unless the carbon price is high enough, why should anyone be incentivized to take up such costly projects? ... EU has a carbon price touching $100/mtCO2e, and that's why it's lucrative to invest for that scheme."

An India-based project developer involved in carbon removal activities said that if the government integrated CCUS more clearly into the offset market mechanism, it could incentivize developers.

"While CCUS is featured in the government's Article 6.2 and domestic offset market list, there needs to be integration with the compliance carbon markets, allowing verified CCUS outcomes to generate tradable credits or compliance value," the developer said.

Platts, part of S&P Global Energy, assessed the price for technology-based removal credit biochar India at $135/mtCO2e on Jan. 30.