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

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

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.

Suggested Citation

  • Fan, Jing-Li & Li, Zezheng & Li, Kai & Zhang, Xian, 2022. "Modelling plant-level abatement costs and effects of incentive policies for coal-fired power generation retrofitted with CCUS," Energy Policy, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:enepol:v:165:y:2022:i:c:s0301421522001847
    DOI: 10.1016/j.enpol.2022.112959
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