An accurate equation of state (EOS) for carbon dioxide is coupled into an improved lattice Boltzmann equation (LBE) model. With the model continuous interfacial dynamics of carbon dioxide in two phase in a microchannel, including breaking up, coalescence, deformation, and mass exchange between gas and liquid phases, is studied. It is found that flows achieve a steady-state as balance of breaking up and coalescence is reached, and mass exchange occurs. Comprehensive results show that flow shape at steady-state depends mainly on surface tension, inertial force, wettability of channel surface, and initial volume fraction. Specially, formative bubbles or droplets are almost spherical as inertial force is smaller than surface tension. As surface tension overcomes inertial force, slug flow is formed since bubbles or droplets are easy to expand to contact with solid surface. On the other hand, it shows that influence of wettability on flow pattern is also important. Slug flow is observed if contact angle is small while annular flow is observed if contact angel is large. At different volume fraction slug flow and annular flow are obtained.