Economic feasibility and policy incentive analysis of Carbon Capture, Utilization, and Storage (CCUS) in coal-fired power plants based on system dynamics.

Abstract

Carbon Capture, Utilization, and Storage (CCUS) is an important potential technical way for coal power plants to achieve near-zero carbon emissions with the current energy structure in China being dominated by coal. However, CCUS is still at the early demonstration stage, and there are many uncertainties in the business model and policy incentives that the traditional method can no longer handle. At the same time, few studies have analyzed these issues. Taking coal-fired power plants as the research object, we adopt the system dynamics method (SD) to compare the economic feasibility, stability, and CO2 emission reduction effect of the CCUS in the vertical integration model and the CCUS operator model. Furthermore, this paper also studies the effect of different incentive policies on CCUS. Results show the following: (1) Both models are economically viable. From the stability perspective, the CCUS operator model is superior to the vertical integration model. (2) In terms of the effect of individual policies, the government's preference for subsidies to the coal-fired power plant can significantly reduce CO2 emissions. Increasing the additional government subsidy and carbon tax can accelerate the CCUS system into a relatively stable state, but beyond a certain range, the marginal CO2 capture rate, marginal CO2 emission reduction rate, and marginal profit rate of each department will be significantly reduced. The storage enterprise highly depends on the government subsidy. Low government subsidy allocation, low additional government subsidy, and a low carbon tax will lead to continuous negative profits for the storage enterprise, making the CCUS system unsustainable. (3) The impact of combination policies on CCUS is not simply the sum of the effects of individual policies. Each policy has a counteracting or reinforcing effect on the other.