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Mathematical Problems in Engineering
Volume 2016, Article ID 8180674, 15 pages
Research Article

Evaluating CCS Investment of China by a Novel Real Option-Based Model

School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China

Received 22 September 2016; Revised 4 November 2016; Accepted 9 November 2016

Academic Editor: Leonid Shaikhet

Copyright © 2016 Hongrui Chu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Carbon capture and storage (CCS) technology is an effective method to mitigate CO2 emission pressure; however it is hard to be evaluated due to uncertainties. This paper establishes a real options analysis (ROA) model to evaluate CCS investment from the perspective of the existing thermal power plant by considering the fluctuations of electricity price, carbon price, and thermal coal price. The model is solved by the proposed robust Least Squares Monte Carlo method and China is taken as a case study to assess power plant’s CCS investment revenue. In the case study, robust ROA and ROA are compared under some CCS incentive factors. The results indicate that the proposed robust ROA is more realistic and suitable for CCS evaluation than common ROA to some extent. Finally, a policy schema to promote CCS investment is derived.