Generation investment decision-making is a very complicated problem in the electricity market environment due to various kinds of uncertainties. The enforcement of the energy-saving and emission reduction policy as well as the emissions trading scheme will make the problem even more complicated especially for coal-fired generation units. Against such a background， a new approach is developed for evaluating the value of a generation investment project in a power industry environment with the emission trading enforced. A real option based model for this purpose is proposed， and the project value and optimal investment timing obtained by the least-squares Monte-Carlo method. The impact of market factors and the regulating policy on generation investment decision-making are illustrated by a numerical example with different scenarios.