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

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.

Automated summary

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. The study finds that multiple incentives used together will help the early development of CCUS projects, and suggests that giving coal-fired CCUS the same subsidies as carbon-free electricity will promote the retrofitting of CCUS to CFPPs.