This paper presents an experimental and numerical investigation on anisotropic permeability of coal in order to evaluate the effects of the anisotropic permeability variation on CO2 sequestration in coal and CO2-sequestration enhanced coalbed methane (CO2-ECBM) recovery from coal seams. An alternative permeability model has been developed to improve reservoir simulation for CO2 sequestration in coal and coalbed methane (CBM) recovery and provide better understanding of the CO2-ECBM process. Combined with experimental observations, the permeability model adopts a discontinuum medium approach, by which coal is treated as a discontinuum medium containing anisotropic matrixes and cleats. The permeability variations and anisotropic permeability ratios under isotropic net stresses were tested with relatively large coal samples to provide experimental information for model parameterization and validation. The model was further incorporated into a 3D coal reservoir model for reservoir simulations to investigate the impact of the anisotropic permeability of coal on coalbed methane (CBM) recovery. The simulations show good agreements with the experimental data, revealing that the developed model is superior for describing stress- and sorption-induced permeability variations in coals compared with commonly used permeability models that treat coal as isotropic media and use constant values for stress-dependent parameters. The results suggest that anisotropic permeability has significant effects on gas production and CO2 breakthrough time, implying that it is a critical parameter in determining well pattern and orientation of horizontal wells. (C) 2015 Elsevier B.V. All rights reserved.