India’s First Major Carbon Capture Drive in Oil & Gas Kicks Off with New Regulatory Amendment

Oilfield Amendment Bill Marks Shift to Green Energy, Carbon Mitigation in India

In a landmark legislative development, India’s Lok Sabha has passed the Oilfield (Regulatory and Development) Amendment Bill, marking the most environmentally forward-looking reform in the nation’s oil and gas policy landscape in decades. Central to this updated framework is a robust push to integrate Carbon Capture, Utilisation, and Storage (CCUS) technologies within the regulatory ambit of oilfield operations. The bill, a revision of the long-standing Oilfields (Regulation and Development) Act, represents a confluence of climate goals and energy security mandates, aligning domestic hydrocarbons policy with India’s international commitments on emissions reduction.

The amendment introduces stricter environmental guidelines, economic incentives, and punitive measures to ensure the oil and gas sector begins transitioning towards low-emission operational models. By embedding CCUS into the legal and procedural structure of India’s upstream energy sector, the government has provided a strong legislative backing to what was, until now, an aspirational concept for decarbonising fossil fuel extraction.

• Amendment formalises CCUS as a mandatory regulatory component in oilfields

• Pushes for environmentally responsible hydrocarbon development

• Introduces penalties up to ₹25 lakh for non-compliance, escalating by ₹10 lakh per day

• Lays legislative foundation for future green energy integration, including hydrogen

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CCUS as a Legislative Mandate: A Paradigm Shift in Oilfield Environmental Regulation

The most critical element of the amendment is the institutionalisation of Carbon Capture, Utilisation, and Storage technologies into the oilfield regulatory regime. For the first time, oil exploration and production (E&P) operators are not merely encouraged but required to incorporate carbon capture practices into their operational workflows. The bill does not treat CCUS as an optional add-on, but rather as a functional requirement embedded in licensing, compliance, and environmental clearance processes.

This legislative move transitions India from soft advocacy to a mandatory, codified approach to carbon capture, reinforcing the nation’s global image as a responsible climate stakeholder.

• CCUS included as a core component in upstream energy operations

• Structured regulatory obligations tied to carbon mitigation benchmarks

• Codified policy transition from voluntary climate action to enforceable mandates

Incentives and Public-Private Collaboration to Propel CCUS Adoption

To ease the cost of compliance and spur innovation, the bill offers fiscal and non-fiscal incentives to early movers in the carbon capture space. These include tax credits, accelerated depreciation benefits, and financial support for R&D. The bill explicitly encourages public-private partnerships (PPPs) to foster faster technology deployment, suggesting a clear openness to international joint ventures in CCUS pilot programs and infrastructure.

Additionally, the amendment promotes international collaboration, positioning India as an attractive jurisdiction for foreign firms with advanced CCUS technology looking to enter the South Asian market.

• Tax incentives and capital subsidies for CCUS deployment

• Dedicated R&D push for low-cost, scalable capture technologies

• Encouragement of PPPs and cross-border technology transfers

Compliance Mechanism with Financial Penalties to Enforce Environmental Standards

To ensure oilfield operators adhere to the new environmental norms, the government has backed the policy with a penalty-based enforcement mechanism. Firms that fail to comply with mandated CCUS integration or flout environmental protocols may face fines of up to ₹25 lakh initially, followed by daily penalties of ₹10 lakh for continued non-compliance.

This provision underscores the government’s seriousness in tackling industrial carbon emissions and eliminating regulatory laxity in one of the most carbon-intensive sectors of the economy.

• ₹25 lakh fine for initial non-compliance with CCUS requirements

• ₹10 lakh daily fine for continued environmental violations

• Strict timelines and operational audits planned for enforcement

CCUS Aligned with India’s Larger Green Energy Strategy

The bill also references a wider strategy that includes clean hydrogen production, energy transition targets under the National Green Hydrogen Mission, and long-term commitments made under the Paris Agreement and India’s net-zero ambitions by 2070. By embedding CCUS within oilfield regulation, the government is establishing sectoral convergence across climate, energy, and industrial policy frameworks.

The bill will also help improve India’s ESG (Environmental, Social, and Governance) profile, attract climate-aligned capital, and set a precedent for future regulatory reforms across coal, steel, and cement sectors—other heavy emitters where CCUS is applicable.

• Integrates CCUS with India’s broader climate and green energy roadmap

• Links oil and gas sector compliance to global climate finance eligibility

• Provides a blueprint for sectoral replication in other high-emission industries

Implications for the Future of India’s Energy and Environmental Policy

The passage of the Oilfield (Regulatory and Development) Amendment Bill signals the beginning of a new era in Indian energy governance, one where environmental sustainability is no longer a policy footnote but a core operating principle. With the oil and gas sector representing one of the largest sources of industrial emissions, this regulatory realignment will reshape investment strategies, project financing models, and operational dynamics across the board.

The strong legal recognition of CCUS not only accelerates India’s own transition but may also serve as a model for other emerging economies facing the dual challenge of energy demand growth and emissions mitigation.