The main objective of this research is to develop a bottom-up energy-economic model considering endogenous technological development. The designed model analyzes the feasibility of CCS technologies in the Japanese electricity market to derive an optimum carbon reduction scenario. Two factors, a learning curve based on learning-by-doing and public R&D investment, precede technological progress. The analysis is calculated with a set of scenarios, which is based on alternative assumptions for technological characteristics: chemical and physical carbon absorptive technology. From modeling estimation, we conclude that technological progress reduces the generation costs of conversion technologies with CCS, as a CCS system acquires an additional unit of installation. Generation cost with chemical absorption remarkably reduces its marginal unit cost through a learning mechanism. The supply fraction from a gas-fired power plant increases over the analytical time period. The introduction of CCS reduces carbon emission level 17% compared to the baseline scenario in 2050. Technological progress has little impact on the total system costs; however, learning-by-doing pushes the introduction of CCS into the market rather than into a R&D activity. Research and development efforts in the private sector or knowledge spillover are not modeled in the study; however, they have the potential to contribute to the mitigation of carbon emission as well.