Modelling plant-level abatement costs and effects of incentive policies for coal-fired power generation retrofitted with CCUS

Jing-Li Fan, Zezheng Li, Kai Li and Xian Zhang

Energy Policy, 2022, vol. 165, issue C

Abstract: Coal-fired power plants (CFPPs) are the main source of CO2 emissions in China, and carbon capture, utilization, and storage (CCUS) is widely recognized as a key technology for achieving carbon neutrality in the power industry. However, due to the high investment risk and cost of CCUS technology, it has not yet entered commercialization. Based on a source-sink matching model, this study uses the Levelized Cost of Energy (LCOE) approach to evaluate the cost of electricity generation after retrofitting CCUS projects at plant-level to CFPPs nationwide and considers the incentive effects of carbon markets, subsidies for additional generation hours, and a U.S. 45Q tax credit policy. Analysis indicates that without any incentives, the LCOEs of Chinese CFPPs after retrofitting with CCUS range from −15 to 134 USD/MWh, with an average value of 73 USD/MWh. Multiple incentives used together will help the early development of CCUS projects, and if coal-fired CCUS is given the same subsidies as carbon-free electricity, this will promote the retrofitting of CCUS to CFPPs. These insights suggest that CCUS is a key cost-effective technology that can help China's existing CFPPs achieve economic decarbonization, and provide useful information for electric power enterprises and government decisionmakers.

Keywords: CFPPs; CCUS; Source-sink matching; LCOE; Incentive policies (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:165:y:2022:i:c:s0301421522001847

DOI: 10.1016/j.enpol.2022.112959

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