Interview with Dastur Energy’s Atanu Mukherjee
Dastur Energy is a technology and consulting firm actively working in the areas of carbon capture, utilization and storage (CCUS), clean energy systems, and industrial decarbonization. In an interview with Power Line, Atanu Mukherjee, Chief Executive Officer of Dastur Energy, shared his insights on India’s evolving energy transition landscape, key policy developments, the company’s ongoing projects, and the outlook for the sector…
How do you rate India’s energy transition journey so far? What more needs to be done?
India’s energy transition has been commendable, with the rapid adoption of new energy sources for electricity generation. With ambitious targets set for the next four to five years, India is on a strong growth trajectory in renewable energy development.
Currently, solar and wind account for 11-12 percent of the actual electricity generated, while hydropower contributes an additional 10-11 percent. The remainder of the energy mix is dominated by coal, with smaller contributions from biomass and other sources. A successful energy transition must be guided by three fundamental principles — reliability, affordability, and a low carbon footprint. Finally, the transition must also prioritize a low carbon footprint and aim to minimize emissions.
So far, the focus has primarily been on increasing solar and wind capacity. However, simply adding renewable energy capacity does not guarantee affordability, reliability, or seamless grid integration. Challenges such as power intermittency, grid stability, and the low retail price of electricity must also be addressed to ensure a resilient and sustainable energy system.
India can draw valuable lessons from global experiences. Countries such as Germany, the UK, and the US have faced significant challenges related to affordability, grid stability, and energy security as they transition towards renewables. India must adopt robust planning strategies to effectively integrate renewables into a diversified power mix by learning from these experiences. This includes ensuring adequate backup generation, strengthening grid infrastructure, and optimizing energy storage solutions. Such an approach will help India not only achieve its decarbonization goals but also ensure energy security and economic growth.
How important are clean coal technologies and CCUS for achieving climate change goals in India?
To ensure a stable, affordable, and clean power supply, it is essential to integrate supporting power systems in the right proportion and manner.
One approach to achieving this balance is through CCUS applied to coal-based power plants. Given India’s increasing appetite for electricity, coal capacity will continue to meet baseload demand. By implementing CCUS technology in coal-fired, coal gasification-based, and gas-based power plants, India can significantly reduce carbon emissions while maintaining energy security.
However, it is important to acknowledge that, like renewable energy, CCUS imposes additional costs. To offset these, India can adopt incentive mechanisms modeled on international examples—such as the U.S. 45Q tax credit, which offers $60-$85 per tonne of captured CO₂. Unlike unconditional tax credits, however, these incentives can be structured through thoughtful financial engineering to defray fiscal liabilities in a budget-neutral manner over a longer time horizon.
Beyond CCUS, an alternative approach is to define a carbon emissions budget rather than pursuing absolute zero emissions—an ideal that remains largely theoretical. Instead of targeting complete decarbonization, India should establish a realistic emissions threshold that aligns with its development priorities, balancing environmental sustainability with economic affordability. In addition to optimizing the energy mix, India must invest in advanced grid engineering to enable the seamless integration of both intermittent and firm power sources.
What can we expect from the upcoming CCUS policy currently under development and how will it influence the growth of the country’s ecosystem?
The Carbon Capture Mission, launched in July 2023 by the Ministry of Power, is actively working towards finalizing the policy. It will provide a comprehensive roadmap that supports CCUS deployment in India through well-defined incentives, financing mechanisms, and regulatory structures. We initially collaborated with NITI Aayog in 2021-22 to frame the foundational policy framework for large-scale CCUS adoption in India. The policy’s primary objective is to enable CO₂ abatement across key sectors, including the power sector and hard-to-abate industries such as steel, petrochemicals, plastics, and oil refining.
To enable the large-scale deployment of CCUS, the policy framework is expected to incorporate key components such as incentive mechanisms, which include tax credits and cash incentives. Capital support through a viability gap funding mechanism is also being considered to partially finance CCUS infrastructure. Additionally, the creation of a carbon capture finance corporation is proposed to serve as a nodal agency for structured and transparent financing of CCUS projects. On the technical front, the policy will emphasize geological mapping and site identification for CO₂ sequestration, with the government leading further assessment of storage potential across Indian basins.
What kind of projects is Dastur Energy currently working on and which organisations are you collaborating with to implement these projects in India?
Dastur Energy is actively involved in several CCUS and energy transition projects both globally and within India, working with public as well as private sector entities. In collaboration with Indian Oil Corporation Limited (IOCL), the company has executed projects focused on CO₂ capture, transport, and sequestration for enhanced oil recovery, and is currently partnering with IOCL and the Asian Development Bank (ADB) on another major CCUS initiative. With Bharat Petroleum Corporation Limited (BPCL), Dastur Energy led a comprehensive study on carbon capture, transformation, and sequestration.
In Gujarat, the company is engaged in the Blue Refinery Project with GMDC, integrating CCUS into a coal gasification-based refinery to produce clean energy products while reducing emissions. Additionally, Dastur is working with a vertical energy company to develop gasification-based carbon capture systems aimed at creating sustainable decarbonization pathways for heavy industries.
Dastur Energy is also engaged with government agencies and institutions on strategic initiatives such as grid modernization, resource integration, and renewable energy deployment. The company is also involved in evaluating optimal mixes of coal, nuclear (including small modular reactors), hydro, and renewables to ensure a reliable, affordable, and sustainable power system. The broader objective is to develop a comprehensive energy strategy that integrates CCUS, renewables, dispatchable power sources, and advanced technologies to establish a resilient, low-carbon, and future-ready energy ecosystem for India.
In what capacity are you engaged with the Ministry of Coal on the Coal Gasification Mission?
Dastur Energy was instrumental in initiating the concept of coal gasification in collaboration with Coal India Limited and the Ministry of Coal as early as in 2018. One of the key contributions we made was framing the fundamental approach for the large-scale commercial viability of coal gasification projects. We emphasized that for coal gasification to be effective at scale, it cannot be limited to a single product. It must produce multiple high-value products to create a balanced portfolio that will generate sufficient returns on investment, mitigate business risks, and protect against market volatility.
This multi-product approach has now become a guiding principle in the way coal gasification projects are being structured in India. This is reflected in the ongoing initiatives under Coal India Limited’s coal gasification and other emerging projects. Beyond government collaborations, we are engaged with large private sector players, helping them design and develop the right mix of end products for coal-derived energy and chemicals.
What are your thoughts on industries that are taking initiatives to decarbonize their operations?
The decarbonization of industrial operations in sectors such as steel, petrochemicals, and cement is one of the biggest challenges we face today. Unlike the power sector, where renewables can replace fossil fuels to a significant extent, industries like steel and cement cannot operate simply by switching to renewable energy. Since these industries cannot eliminate CO₂ emissions entirely, CCUS emerges as a viable alternative. However, the challenge with CCUS is that it needs to be implemented in a way that keeps operational and capital costs manageable so that industries remain competitive.
We place strong emphasis on enhancing energy efficiency as it is one of the most effective ways to reduce carbon emissions. Based on our studies and project experience, improving efficiency can reduce energy consumption by 15-20 percent.
Alternative green technologies, such as hydrogen-based steelmaking and CO₂-to-methanol conversion, show promise but remain commercially unviable due to high costs. Hydrogen steelmaking is currently twice as expensive as traditional methods, while green methanol production can cost up to $1,000 per tonne compared to $150-$200 using conventional methods. Hence, the most practical approach to decarbonizing heavy industries is a combination of carbon capture, efficiency improvements, and long-term investment in emerging technologies.
How do you see the Indian market developing over the next few years, and what will be the role of the public and private sectors in promoting CCUS technology?
The outlook for the energy market in India is very positive. The challenge lies in meeting this demand efficiently and looking for ways to harness coal in the cleanest possible way, scaling nuclear energy cost-effectively, and leveraging other domestic energy sources to reduce reliance on imports. There is considerable scope for innovation, investment, and policy-driven change. The public and private sectors must collaborate to ensure that India’s energy future is secure, sustainable, and aligned with its economic ambitions.