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HomeEconomyBudget 2025: Plan afoot to decarbonise power, steel

Budget 2025: Plan afoot to decarbonise power, steel

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India is working on a national carbon capture utilisation and storage (CCUS) mission to support decarbonising hard-to-abate sectors such as thermal power, iron and steel, and cement plants, people familiar with the matter told ET.

The contours of the mission are being firmed up and an announcement could be made in the February budget, they said. This mission will be in line with India’s goals to halve carbon emissions by 2050 and attain netzero emissions by 2070.

“Discussions are on, on the contours of the mission… details are being worked out,” a senior government official said. A committee under the chairmanship of the Central Electricity Authority (CEA) is in place for defining the requirement and timeline of this mission and scheme needed to implement the goals, the person said.Asecond official said two meetings of this committee have already taken place.

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Incentives for Equipment
It has been concluded that costs of carbon capture technology need to come down for India to attain its emission reduction goals, he said. The mission would provide incentives for manufacturing equipment used for CCUS and sops for per-tonne carbon emission abated.

“Rules governing the scheme would be firmed up after the contours of finalised later during the coming financial year,” the official said. In her July 2024 budget speech, finance minister Nirmala Sitharaman said a roadmap for moving the “hard-to-abate” industries from “energy efficiency” targets to “emission targets” will be formulated. She also said that regulations for transition of these industries from the current Perform, Achieve and Trade mode to the Indian Carbon Market mode will be put in place. Deliberations on speedier operationalisation of India’s carbon trading markets and firming up incentives for industries that switch to lower emissions have been held at the highest level in the government.COAL RELIEF
CCUS is expected to provide relief to users and generators of coal-based electricity, which still contributes around 70% of India’s power needs, as global pressure to tax polluting energy grows. Experts said coal-based generation will remain India’s baseload power despite having substantial renewable installed capacity by 2030. India has planned 85 GW of thermal capacity addition by 2032.

The current thrust on the technology, which is expensive due to the absence of scale, comes after at least a year of deliberations involving various ministries and the NITI Aayog. According to the International Energy Agency, CCUS involves the capture of carbon dioxide, generally from large point sources. This is then compressed and transported by pipeline, ship, rail or truck to be used in a range of applications or injected into deep geological formations such as depleted oil and gas reservoirs or saline aquifers.

The industry favours support measures such as the viability gap funding. Atanu Mukherjee, CEO of US-headquartered Dastur Energy, said initiatives such as viability gap funding (VGF) and production-linked incentive (PLI) programmes can kickstart large-scale adoption of CCUS in India. “India can adopt a hybrid investment strategy to fund early-stage CCUS projects, reduce risks for private players, and make these projects viable,” Mukherjee said.

According to Vikram Handa, MD at Epsilon Carbon, a national CCUS mission can encourage manufacturers, drive lower emissions.

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