A novel methanol-based power system with Chemical-Looping Combustion (CLC) is proposed in this paper. CLC system is a promising approach to greatly decrease the energy penalty for CO2 removal, where iron oxides circulate between two reactors and an inherent CO2 separation occurs. The combustion process of CLC systems mainly include two steps: a reduction reaction of iron oxides, where the fuel is not mixed with air and the thermal energy for the endothermic reaction is supplied by the intercooling heat of the compressor of the gas turbine, and an oxidation reaction of iron oxides, where the compressed air is heated by the iron oxides. On the basis of the system's integration of cascade utilization of chemical energy of methanol and thermal energy, the thermal efficiency of this novel cycle is expected to be 56.8% with 90% of CO2 recovery, 10.2 percentage points higher than a combined cycle (CC) with the same CO2 capture. The promising results obtained here indicate that this novel thermal cycle is a promising approach to accomplish the efficient utilization of chemical energy of methanol without a decrease in thermal efficiency for CO2 removal. (C) 2008 Elsevier Ltd. All rights reserved.