Profit-driven economic expansion planning of CCUS deployment and carbon trading in carbon-neutral energy systems under liberalized market-oriented decarbonization strategies with step-based pricing

Xinmin Kong, Yangbing Zheng, Shu Yang and Yuan Wang

Energy, 2025, vol. 334, issue C

Abstract: The transition toward carbon-neutral energy systems requires an integrated economic framework to optimize the deployment of Carbon Capture, Utilization, and Storage (CCUS) technologies under liberalized electricity markets. This study proposes a profit-driven expansion planning model that incorporates step-based carbon pricing, market-driven carbon trading strategies, and investment risk assessments to support large-scale CCUS adoption under market-oriented decarbonization policies. Unlike conventional static approaches, our dynamic op.timization framework captures carbon pricing uncertainties, market fluctuations, and economic trade-offs in expansion planning. The model is validated using two benchmark systems: the modified IEEE Reliability Test System-1996 (wind-coal-intensive) and the modified IEEE High Renewable Penetration 38-Bus system (multi-energy integrated). Results show that step-based carbon pricing reduces total system costs by up to 12.13 % and increases carbon trading benefits by 263.20 million dollars. Solvent-stored carbon capture power plants (SSCCPPs) achieve 47.53 % higher emission reduction efficiency compared to divided-flow technologies (DFCCPPs), while lowering startup/shutdown costs and wind curtailment penalties. CCUS integration cuts carbon emissions by over 55 % compared to traditional fossil systems and shifts carbon trading from financial penalties to profits of up to 1707.15 million dollars. The findings highlight the critical role of progressive carbon pricing, structured investment incentives, and adaptive policy mechanisms in accelerating CCUS deployment and achieving carbon-neutral objectives.

Keywords: CCUS deployment; Carbon trading; Step-based pricing; Economic optimization; Carbon-neutral energy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:334:y:2025:i:c:s0360544225024041

DOI: 10.1016/j.energy.2025.136762

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