A US trade body has announced grant funding to the Indian Oil Corporation's (IOC) carbon capture, utilisation and storage capacity in the Koyali refinery in Gujarat.

The US Trade and Development Agency's (USTDA) funding will support state-owned IOC's evaluation of technologies to capture and utilise carbon dioxide produced during refinery operations, presenting a novel and cost-effective environmental strategy that can be expanded to other refineries in India, according to a statement on Wednesday.

"This project is an ideal example of the groundbreaking work (the) USTDA supports and makes possible," said Chief Operating Officer, USTDA, Todd Abrajano.

"This innovative solution, a first-of-its-kind in India, is how we are showing American technology will make a meaningful impact on India's refinery operations," said Abrajano.

The American firm selected will be paid in US dollars from a USD 507,690 grant to the grantee from the USTDA, the agency said in a press release.

Carbon capture is the process of trapping carbon dioxide from large sources of emission, with the aim to recycle the waste product and check pollution.

Reacting to the grant announcement, IOC Board Member and Director Dr SSV Ramakumar said, "This project is consistent with our vision to provide superior quality products using sustainable technologies. Indian Oil is at the forefront of innovation, and our cooperation with (the) USTDA will help us become a leader in the utilisation of carbon capture technologies.".

The USTDA said this initiative aligns with its key energy priorities, including Asia Enhancing Development and Growth through Energy programme and the US-India Strategic Energy Partnership.