A capillary tube-based CO2 heat pump is unique because of the transcritical nature of the system. The transcritical cycle has two independent parameters, pressure and temperature, unlike the subcritical cycle. A comparative study for various operating conditions, based on system COP and exergetic efficiency, of a capillary tube and a controllable expansion valve-based transcritical carbon dioxide heat pump systems for simultaneous heating and cooling at 73 and 4 degrees C, respectively, is presented here. Two optimized capillary tubes having diameter of 1.5 and 1.6 mm are compared with an equivalent controllable throttle valve. Heat transfer and fluid flow effects are included in the gas cooler and evaporator model and capillary tube employs the homogeneous flow model to simulate two-phase flow. Subcritical and supercritical thermodynamic and transport properties Of CO2 are calculated employing a precision in-house property code. Optimization of effective distribution of total heat exchanger area ratio between gas cooler and evaporator is investigated. The exergetic efficiency is better in case of the capillary tube than that of a controllable throttle valve-based system. Capillary tube-based system is shown to be quite flexible regarding changes in ambient temperature, almost behaving to offer an optimal pressure control just like the controllable expansion valve yielding both, maximum system COP and maximum exergetic efficiency. Relatively at a smaller diameter, the capillary tube exhibits better exergetic efficiency. Capillary tube length is the critical parameter that influences system optimum conditions. The exergy flow diagram exhibits that compressor, gas cooler and capillary tube contribute a larger share, in that order, to system irreversibility. It is fairly established in this study that a capillary tube can be a good engineering option for small capacity systems in lieu of an expansion valve, which has been thought of as the only possible solution to attain the pressure optimization, an important feature of all transcritical CO, systems. Copyright (C) 2009 John Wiley & Sons, Ltd.