Abstract: CO2 enhanced oil recovery (EOR) technology has gained widespread application in various oil reservoirs. However, there remains a dearth of research exploring the CO2 enhanced gas recovery (EGR) and the sequestration capabilities of carbonate gas reservoirs with edge-water in China. To understand the EGR mechanisms and CO2 sequestration potential within carbonate gas reservoirs with edge-water, a study was conducted by using numerical simulation techniques to model CO2 flooding in the M carbonate gas reservoir with edge-water as a case. Firstly, a numerical simulation model of M carbonate gas reservoirs with edge-water considering the chemical reaction of CO2-water-rock was established, to simulate the Solution and precipitation behavior of CO2, water and rock. Secondly, a transfer injection well optimization system suitable for M carbonate gas reservoirs with edge-water was established, wells suitable for CO2 injection are preferred. Then, a CO2 flooding development plan be applicable to the M carbonate gas reservoirs with edge-water was devised. Based on the optimal development plan, the recovery of natural gas and CO2 sequestration performance were predicted. Finally, the mechanisms of EGR and CO2 sequestration in M carbonate gas reservoirs with edge-water were revealed. The results shows that the optimal plan is three-injection and seven-production. The gas injection rate for the total M reservoir area is set at 22.5×104 m3·d-1, with a total injection volume of 16×108 m3 during the gas drive stage. The shut-in time is established based on the molar concentration of CO2 in the production well, which is targeted to reach between 10% and 30%. The gas production rate for the entire area is maintained at 22.5×104 m3·d-1, with the optimal gas drive plan spanning 19.5 years. Remarkably, the recovery under this plan is 84.5%, surpassing the anticipated depletion development recovery for 7.89%. Several conclusions are revealed. Firstly, following injection, CO2 diffused from the injection well towards the periphery of the reservoir, with a movement from higher to lower elevations. This diffusion process led to an increase in gas density within the formation. The water saturation near the injection well showed a decreasing trend, and the gas-water interface decreased significantly (50-100 m). Effectively mitigating the edge water invasion, which is a common challenge in such reservoirs. Secondly, under the optimal development plan, the effective CO2 sequestration capacity is predicted for 14.29×106 t. This total capacity is composed of supercritical sequestration (13.56×106 t), solution sequestration (0.53×106 t), and mineral sequestration (0.20×106 t). The small error between the numerical simulation results and the mathematical model predictions further validates the accuracy and reliability of the findings. The results of this research are profound. The M gas reservoir exhibits significant potential for CO2 flooding development and storage. Findings not only provides scientific guidance for the efficient development of carbonate gas reservoirs with edge-water but also offers crucial data support for the application of carbon emission reduction technologies. In conclusion, the CO2 EGR and CO2 sequestration by CO2 injection in carbonate gas reservoirs with edge-water can maximize economic benefits and help achieve the dual carbon target.