Abstract: CO₂ injection into coal seams is recognized as an effective approaching to reduce CO₂ emission and enhance coalbed methane recovery.The injection-production process is a coupled process involving multiphase flow, heat transfer and mechanical deformation.The permeability of fractures within the cleat system is one of the key factors controlling the efficiency of injection and extraction, which relates to the fracture aperture and matrix size.The aperture is controlled by both of the effective normal stress and shear dilation.The matrix deformation is calculated by the total strain and aperture change.Then, based on the parallel plate fracture flow model, an anisotropy permeability model for the highly fractured coal is developed to predict the evolution of permeability on the different directions.A coupled THM model that employs the new anisotropy permeability model was applied into TOUGH-FLAC to study the CO₂ injection and methane extraction.The results of the numerical simulations indicate that the variation of pore pressure as a result of CO₂ injection and methane production causes the coal seams uplift and subsidence around the area of injection and production well.The mechanical behavior has a significant effect on the evolution of permeability, especially the changes of pore pressure and temperature, and swelling/shrinkage strain induced by CO₂ adsorption/methane absorption.The permeability variations show the marked differences in the different directions.The greatest permeability anisotropy ratio reaches as high as about 30, which is sensitive to the effective normal stress and curvature parameter.Moreover, at the initial stage of CO₂ injection, the region near the injection well has the potential to occur the coal damage that provides a new path for CO₂ and methane leakage, so more particular attention should be given.