Coal-dependent India plans to invest in CCS. Will it help it reach net zero?

India is preparing a national programme to support carbon capture and storage (CCS) technologies. The initiative could offer 50% to 100% funding for selected projects, Rajnath Ram, an energy adviser at the government think tank NITI Aayog, announced at a summit organised by the Indian Chamber of Commerce.

CCS is a way for the Indian government to ensure it meets its climate agreements and targets. This is also why funding is being increased. CCS is gaining fresh momentum, and in recent years the sector has seen several announcements of projects exploring the technology and its implementation in various parts of the world.

India, too, has made progress in recent years. British company Carbon Clean opened one of the world's largest research hubs focused on CCS in India this year. Another example is Shell, which in December 2022 launched a study with Indian company Oil and Natural Gas Corporation (ONGC) into potential suitable storage sites.

The Indian context

India is one of the countries increasingly promoting CCS and working on its implementation. The reason is simple: India is heavily dependent on coal-fired power plants. According to the IEA, they currently provide more than 45% of India's electricity supply, and unlike in European countries, most of these plants are relatively new. A large share of India's coal-fired power plants were built between 2007 and 2015.

At the same time, electricity demand in India is expected to rise by around 6% year on year. The main drivers of growth are industrial demand and the increasing ownership of air conditioners, which are expected to account for up to a third of electricity consumption during peak-demand hours in 2030. All of this is, of course, connected to the country's overall economic development.

India expects coal to remain a key part of its power system for at least another two decades. Rising demand is driving an overall increase in plans to expand electricity generation. India plans to increase installed capacity from non-fossil sources to 500 GW by 2030, while also planning to add 95 GW of coal-fired capacity by 2035. This would bring installed coal capacity to 307 GW. CCS is therefore the only way India can maintain its pace of growth while meeting its climate commitments and potentially reaching net zero in 2070.

The future of carbon storage is uncertain. On the one hand, it could be a solution for countries whose energy mix is heavily dependent on fossil fuels; on the other, CCS has problems for which no simple solutions appear to be available. India, however, is betting heavily on the technology, and its results are likely to be important for the future of CCS/CCUS.