Budget 2026 Carbon Credit Programme

Source: TH

Context:

A ₹20,000 crore allocation in Union Budget 2026 for a “carbon credit programme” has triggered confusion over its actual intent—whether it targets industrial decarbonisation through CCUS or aims to create carbon income opportunities for farmers.

Core Issue:

• Two competing interpretations:
  1. Industrial focus (CCUS-based decarbonisation)
  2. Agriculture-focused carbon credit income for farmers
• Official evidence indicates the primary focus is on industrial carbon capture technologies, not agriculture.

What is CCUS (Carbon Capture, Utilization, and Storage)?

Carbon Capture, Utilization, and Storage (CCUS) is a technology-based climate solution that involves:

• Capturing CO₂ emissions from industrial sources
• Utilizing the captured carbon in industrial processes
• Storing it underground to prevent release into the atmosphere

What Does CCUS Target?

Hard-to-Abate Industries

CCUS focuses on sectors where emissions are:

• Concentrated (point-source emissions)
• Technically difficult to eliminate using renewables

Key Target Sectors

• Power and Refineries
• Steel and Cement
• Chemicals

These sectors are responsible for a large share of industrial CO₂ emissions and cannot fully decarbonize through renewable energy alone.

Why Agriculture is NOT Included in CCUS

1. Diffuse Emission Sources

• Emissions spread across:
  • Farms
  • Soil
  • Livestock
• No single point for capture

2. Biological Nature of Emissions

• Main gases:
  • Methane (CH₄)
  • Nitrous Oxide (N₂O)
• Produced via biological processes, not industrial combustion

3. Technological Mismatch

• CCUS works on:
  • Concentrated CO₂ streams
• Agriculture deals with:
  • Low-density, scattered emissions

Agriculture’s Role: Carbon Dioxide Removal (CDR)

Instead of CCUS, agriculture contributes through:

• Soil carbon sequestration
• Agroforestry
• Biochar
• Regenerative farming

These methods absorb CO₂ from the atmosphere, rather than capturing emissions at source.