This study analyses a series of carbon dioxide (CO2) emissions abatement scenarios of the power sector in Taiwan according to the Sustainable Energy Policy Guidelines, which was released by Executive Yuan in June 2008. The MARKAL-MACRO energy model was adopted to evaluate economic impacts and optimal energy deployment for CO2 emissions reduction scenarios. This study includes analyses of life extension of nuclear power plant, the construction of new nuclear power units, commercialized timing of fossil fuel power plants with CO2 capture and storage (CCS) technology and two alternative flexible trajectories of CO2 emissions constraints. The CO2 emissions reduction target in reference reduction scenario is back to 70% of 2000 levels in 2050. The two alternative flexible scenarios, Rt4 and Rt5, are back to 70% of 2005 and 80% of 2005 levels in 2050. The results show that nuclear power plants and CCS technology will further lower the marginal cost of CO2 emissions reduction. Gross domestic product (GDP) loss rate in reference reduction scenario is 16.9% in 2050, but 8.9% and 6.4% in RM and Rt5, respectively. This study shows the economic impacts in achieving Taiwan's CO2 emissions mitigation targets and reveals feasible CO2 emissions reduction strategies for the power sector. (C) 2009 Elsevier Ltd. All rights reserved.