Modeling Regional CO2 Control in Energy Production with Cap & Trade Regulation

This paper describes the modeling of CO₂ cap & trade among coal power plants. A regional approach is used to include CO₂ emission restriction (or cap) and trade in electrical power production. The model accommodates multiple nodes, each with its own demand growth, existing capacity, transmission lines connecting the nodes, and sequestration sites. Technologies for CO₂ capture are assumed available to all nodes at the same price tag. Mixed integer programming (MIP) is used: binary variables are used for new construction of either power plants, or transmission, or CO₂ pipelines, while continuous variables are used for representing others such as power production, CO₂ generation, etc. The objective is to minimize regional cost of meeting nodal demands under assumed CO₂ cap & trade regulation and other practical constraints.