Potential analysis of BESS and CCUS in the context of China's carbon trading scheme toward the low-carbon electricity system

Abstract

To achieve the goal of low-carbon electricity transition, the carbon capture, utilization, and storage (CCUS) and a battery energy storage system (BESS) are considered as promising tools for fossil power and renewable power, respectively, to overcome the disadvantages of high carbon intensity and fluctuant output. The potential of these two technologies in the context of carbon trading was systematically analyzed and compared using the real option approach. The results showed that the positive effect of the carbon trading on the adoption of the CCUS was more significant than that of a BESS. Specifically, the influence of the emission quota policy on the adoption of CCUS is limited at beginning because its effects on cost perception and benefit perception are counteractive. In terms of the indirect impacts of the emission trading scheme, electricity marketization can promote the utilization of CCUS and BESS. The potential revenue from selling electricity and emission quotas embodied in the additional operation time can significantly encourage fossil power enterprises to upgrade in advance. Additionally, the carbon cost delivered to the electricity price can increase the revenues of renewable power enterprises and promote the utilization of the BESS. Based on these findings, some policy implications are provided.