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Scaling up CCUS to Power Low-Carbon Transitions: India’s Progress and the Way Forward

Ankur Malyan, Vaibhav Chaturvedi
14 September 2021

A net-zero future is critical to avoiding the worst impacts of climate change. The implication of the new Intergovernmental Panel on Climate Change (IPCC) report’s dire forecasts could not be clearer. The world must achieve carbon neutrality to escape the catastrophe that awaits us beyond the 1.5 °C tipping point. This means we need to significantly accelerate the transformation of our energy systems. And, given that we still depend heavily on fossil fuels, we should explore the potential of emission capture technologies to drive low-carbon transitions.

One such technology is carbon capture, storage, and utilisation (CCUS), which can capture CO2 emissions from fossil fuel combustion in power generation or industrial processes—and then either utilise or store them. A recent analysis by the Council on Energy, Environment and Water (CEEW) found that CCUS relaxes the pace and magnitude of transformations in the fossil energy system in a net-zero scenario. As a result, it could offer a lifeline to investors, corporations, and fossil fuel-dependent communities adapting to the energy transition. This is why CCUS is essential to a low-carbon development pathway.

In this blog, we review recent developments in the CCUS space in India and offer policy recommendations for the road ahead.

India’s growing interest in CCUS

In India, CCUS did not initially receive the attention it deserved. Stakeholder interest remained low due to high costs, limited research and development on techno-economic feasibility, and insufficient policy support. But this is now changing, partly due to Mission Innovation (MI), a global clean energy innovation initiative launched in 2015. Carbon capture is one of the eight innovation challenges India is working on with other MI member nations.
Further, leading industry players and public sector undertakings (PSUs) recognise the importance of achieving carbon neutrality and are spearheading the promotion of CCUS in India. For instance, the National Aluminium Company (NALCO) has commissioned a pilot-cum-demonstration CO2 sequestration plant. The Oil and Natural Gas Corporation Limited (ONGC) and Indian Oil Corporation Limited (IOCL) are exploring CO2-based Enhanced Oil Recovery (EOR) by injecting CO2 captured from IOCL’s Koyali refinery. Private players like Dalmia Cement and Tata Steel are leading efforts to explore the scalability of CCUS in their respective sectors.

India’s growing interest in CCUS

Sustaining the momentum: The way forward

The recent advances in India’s CCUS space are encouraging, but several factors threaten to impede future progress. To sustain the current momentum, we suggest the following measures.

First, we need to develop a dedicated policy ecosystem for Indian CCUS facilities around four essential pillars: R&D, policy, finance, and governance. This will involve carrying out a comprehensive analysis to identify India-specific challenges and local solutions. Further, we need better policy research and communication to adapt to changing requirements, especially in the industrial sector. At the moment, there are no efforts to facilitate focused CCUS research outside the ambit of MI, Department of Biotechnology (DBT), and Department of Science and Technology (DST) projects.

Second, India should support demonstration projects to increase stakeholder confidence in CCUS and better understand the uncertainties surrounding the technology. The CCUS pilots are high-risk but essential for establishing the technology’s long-term viability and understanding the associated trade-offs. Success stories could help attract investments and support the formulation of governance mechanisms that help maximise benefits and minimise risks.

Third, India should explore alternative financing mechanisms to make CCUS technology more affordable to industry players. The cost of CCUS is very high despite decades of research. Market-based mitigation instruments can be crucial ecosystem enablers and help consumers to adopt this expensive yet relevant technology. The US initiative, ‘45Q Tax credit,’ is an example of a promising and aggressive CCS-specific incentive providing a break-even cost opportunity for the technology.

Although CCUS technology is in advanced stages of implementation in developed nations, it is relatively new to India. Scaling it up here will require more comprehensive research, policy action, and investments. But if the technology gains momentum in India, it could help us balance economic development with our decarbonisation goals and pave a smoother path to carbon neutrality.

Ankur Malyan is a Programme Associate, Vaibhav Chaturvedi is a Fellow; Send your comments to ankur.malyan@ceew.in.

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