Storage of carbon dioxide in deep coal seams is a profitable method to reduce the concentration of green house gases in the atmosphere while the methane as a byproduct can be extracted during carbon dioxide injection into the coal seam. In this procedure, the key element is to keep carbon dioxide in the coal seam without escaping for a long term. It is depended on many factors such as properties of coal basin, fracture state, phase equilibrium, etc., especially the porosity, permeability and saturation of the coal seam. In this paper, a variable saturation model was developed to predict the capacity of carbon dioxide sequestration and coal-bed methane recovery. This variable saturation model can be used to track the saturation variability with the partial pressures change caused by carbon dioxide injection. Saturation variability is a key factor to predict the capacity of carbon dioxide storage and methane recovery. Based on this variable saturation model, a set of related variables including capillary pressure, relative permeability, porosity, coupled adsorption model, concentration and temperature equations were solved. From results of the simulation, historical data agree with the variable saturation model as well as the adsorption model constructed by Langmuir equations. The Appalachian basin, as an example, modeled the carbon dioxide sequestration in this paper. The results of the study and the developed models can provide the projections for the CO2 sequestration and methane recovery in coal-beds within different regional specifics. Published by Elsevier Ltd.