Abstract: "Coal-to-gas substitution" in power generation is one of the effective methods to achieve pollutant emission reduction and environmental improvement. However, the high cost of natural gas power generation is not only the key factor restricting the "coal-to-gas substitution" in power generation,but also one of the difficulties that the government departments,enterprises and research institutions need to solve. This paper introduces the idea that "the environmental benefits of emission reduction should be subsidized to electricity generation with natural gas", and we build the system dynamics model of "coal-to-gas substitution" power generation environment benefit with VENSIM software. In this model, we construct 5 situations and carry out sensitivity analysis of the growth rate of power generation demand and the intensity of government subsidies. The results of the emission reduction effect simulation show that the intensity of "government subsidies" can effectively promote emission reduction and electricity generation volume.

Key words: “coal-to-gas substitution”, system dynamics, emission reduction benefits, government subsidy, simulation