Traditional policy incentives for carbon capture and storage (CCS) mainly rely on fiscal subsidies, which tend to put an inordinate strain on public finances. This study attempts to explore a non-fiscal incentive policy, granting a time extension (extra electricity quota), to finance early CCS demonstration projects in China. We find that coal-fired power plant (CFPP) operate at a loss even without CCS retrofitting under the current electricity quota (4000 h per year), while it can make profits with CCS retrofitting if extra electricity quotas are provided. Specifically, the electricity quota needs to be roughly 4709â€“7260 h per year with the CO2 capture level ranging from 0.1 to 1 Mt per year in the demonstration stage. In particular, the levelized cost of electricity (LCOE) of CFPP with a capture level of 1 Mt per year is estimated at 298.8 CNY/MWh if the electricity quota reaches 7000 h per year, which is approximately equal to that of CFPP without CCS retrofitting and extra electricity quota (292.2 CNY/MWh). Thus, the extra electricity quota can be considered as an economically feasible policy incentive, and related results are able to provide useful information for electric power enterprises and government decision-makers.
|Publication status||Published - 2021|