Financial Support for CCUS Initiatives
The Indian government is crafting a policy framework to implement financial incentives aimed at promoting carbon capture, utilization, and storage (CCUS) technologies. This framework includes mechanisms such as viability gap funding, carbon pricing, and subsidies to encourage investments in CCUS initiatives. The Union power ministry, NITI Aayog and the office of the principal scientific adviser to the Prime Minister’s Office (PMO) are working on the mission.
What is Carbon Capture, Utilization, And Storage (CCUS)?
It involves the capture of CO2, generally from large point sources like power generation or industrial facilities that use either fossil fuels or biomass as fuel.
What is the CCUS policy in India?
CCUS allows industries to continue using existing infrastructure, such as power plants and manufacturing facilities, reducing the need for significant capital investments in new, low-carbon alternatives.
Proposed Financial Mechanisms
The government is considering various options for financial support, which could include carbon credits and subsidies to stimulate CCUS adoption in industries responsible for substantial carbon emissions. This is part of a broader strategy to enhance the country’s capacity to capture and utilize CO2 effectively.
Collaboration with the Private Sector
The government’s strategy involves fostering partnerships with the private sector to promote CCUS technologies. This includes the establishment of pilot projects and technological innovations, with financial backing provided to support joint efforts in advancing CCUS applications.
Economic Impact and Opportunities
The introduction of financial incentives for CCUS is anticipated to unlock substantial economic opportunities, potentially leading to a market worth approximately $10 billion over the next five years as new product lines like green ammonia and hydrogen emerge from these efforts.
Long-Term Goals
Ultimately, these initiatives aim to position India at the forefront of CCUS technology deployment, aligning with the nation’s commitment to reduce carbon intensity and achieve net-zero emissions by 2070. The policy framework is expected to be finalized by the end of 2024, targeting a CCUS capacity of 750 million metric tons annually by 2050.
Key Features:
- To support the setting up of pilot plants that can capture 500 tonnes of CO2 per day.
- Region-wise CO2 storage potential in India during 2030-2050 across western, southern, eastern, north-eastern and northern regions would stand at 388.9 gigatons, 80.58GT, 76.3GT, 47.2GT and 7.65GT, respectively.
- CO2 capture capacity of about 361 million tonnes per annum (mtpa) is under development globally. As of 2022, the global CCUS market size was $2.49 billion, and an annual growth rate of 13.3% is expected during 2022-2030.
Policy Suggestions:
- Establish Viability Gap Funding and Carbon Pricing Mechanisms
The Indian government should implement viability gap funding (VGF) to support CCUS projects, ensuring financial assistance for technologies that may not yet be commercially viable. This could be complemented by establishing clear carbon pricing mechanisms that incentivize companies to invest in CCUS solutions, thus driving down emissions and promoting sustainable practices in high-emission industries.
- Integrate CCUS with the Carbon Market
The government should integrate CCUS initiatives with the emerging carbon market in India. By linking CCUS projects to carbon credits, companies could gain financial returns on their investment in emission reduction technologies. This would enhance the economic feasibility of CCUS and encourage broader participation from the private sector.
- Offer Tax Incentives and Subsidies for CCUS Adoption
Tax incentives and subsidies should be introduced to encourage industries to adopt CCUS technologies. Such financial benefits could lower the initial investment required for installation and operation, making it more attractive for businesses to invest in carbon capture and utilization solutions. This approach could lead to significant reductions in carbon emissions over time.