Volume 13: Proceedings Applied Energy Symposium: CUE2020, Part 2, Japan/Virtual, 2020

Tech-economic evaluation of CO2 enhanced coalbed methane recovery technology—A case study of China Xian Zhang, Mao Xu, Shijie Wei, Jingli Fan

Abstract

With the rapid development of China’s economy, the contradiction between the growing demand for fossil energy consumption and the increasingly urgent pressure of emission reduction has become increasingly prominent. As a potential option to address climate change, CO2 enhanced coalbed methane recovery (CO2-ECBM) technology has been widely concerned, which can inject the CO2 captured into the coalbed to enhance coalbed methane recovery and store CO2 at the same time. Therefore, CO2-ECBM technology is of great significance for China’s low-carbon development, especially after China put forward the goal of achieving carbon neutrality by 2060. In order to provide references for CO2-ECBM technology deployment, the investment benefits of the CO2-ECBM project in China under various scenarios was evaluated based on real options in this study, and the key factors influencing the economy of the CO2-ECBM technology were also identified. The results showed that (1) without carbon trading, the investment benefits of CO2-ECBM project is 2.58 billion CNY in low CO2 source purchase price scenario(180 CNY/t); (2) if CO2 source purchase price rises to 300 CNY/t (high CO2 source price scenario), the CO2-ECBM project has no investment value as its revenues cannot offset the total costs; (3) the net present value (NPV) of CO2-ECBM project will decrease by 22.76 million CNY if the CO2 source purchase price increases 1 CNY/t, and the critical CO2 source purchase price is 293 CNY/t without carbon trading; (4) Carbon trading can greatly increase the investment income of CO2-ECBM projects, and in the low CO2 source purchase price scenario, the investment benefits of CO2-ECBM projects would increase by 44.2% with the current carbon trading price (50 CNY/t). However, China has not yet incorporated CO2 utilization technology into the emission trading system. The results of this study could provide theoretical support for CO2-ECBM investment and the relevant policy-making.

Keywords CO2-ECBM; real option; investment evaluation; CO2 emission reduction; CO2 utilization

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