Budget 2026 Carbon Credit Programme: CCUS vs Carbon Farming

Source: TH

Context:

The Union Budget 2026 announced a ₹20,000 crore carbon credit programme, leading to confusion regarding its actual focus:

• Industrial decarbonisation (CCUS-based approach)
• Agriculture-based carbon income (carbon farming)

Official indications suggest that the programme is primarily aimed at industrial carbon capture technologies (CCUS) rather than agricultural carbon credits.

Core Issue: Two Competing Interpretations

1. Industrial Focus (CCUS)

• Targets hard-to-abate industries
• Focus on reducing emissions at source

2. Agriculture Focus (Carbon Farming)

• Expected to provide income opportunities for farmers
• Based on carbon sequestration in soil

The confusion arises due to the broad use of the term “carbon credit programme”.

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

CCUS is a technology-driven climate solution that involves:

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

It is a key tool for achieving deep decarbonisation in industrial sectors.

What Does CCUS Target?

Hard-to-Abate Industries

CCUS focuses on sectors where:

• Emissions are concentrated (point sources)
• Decarbonisation through renewables is difficult

Key Target Sectors

• Power and refineries
• Steel and cement
• Chemicals

These sectors contribute significantly to India’s industrial carbon emissions.

Why Agriculture is NOT Included in CCUS

1. Diffuse Emission Sources

• Agricultural emissions are spread across:
  • Fields
  • Soil
  • Livestock
• No central point for capture

2. Biological Nature of Emissions

• Major gases:
  • Methane (CH₄)
  • Nitrous oxide (N₂O)
• Generated through biological processes, not combustion

3. Technological Mismatch

• CCUS works on:
  • High-concentration CO₂ streams
• Agriculture involves:
  • Low-density, dispersed emissions

Agriculture’s Role: Carbon Dioxide Removal (CDR)

Instead of CCUS, agriculture contributes through Carbon Dioxide Removal (CDR):

Key Methods

• Soil carbon sequestration
• Agroforestry
• Biochar application
• Regenerative agriculture

These methods:

• Absorb CO₂ from the atmosphere
• Enhance soil health and productivity

CCUS vs Carbon Farming

Aspect	CCUS	Carbon Farming
Type	Industrial technology	Nature-based solution
Function	Prevent emissions	Remove CO₂
Source	Factories (point source)	Farms (diffuse source)
Mechanism	Capture & store CO₂	Soil & biomass sequestration
Policy Focus	Budget 2026 allocation	Separate policy needed