How Much CO2 Emissions Can Be Reduced in China’s Heating Industry

China’s heating industry is a coal-fired industry with serious environmental issues. CO2 emissions from the heating industry accounted for an average 6.1% of China’s carbon emissions during 1985–2010. The potential for reducing emissions in China’s heating industry is evaluated by co-integration analysis and scenario analysis. The results demonstrate that there is a long-run equilibrium relationship among CO2 emissions and the influencing factors, including energy intensity, industrial scale, labor productivity, and energy productivity. Monte Carlo technique is adopted for risk analysis. It is found that the CO2 emissions reduction potential of the heating industry will be 26.7 million tons of coal equivalent (Mtce) in 2020 and 64.8 Mtce in 2025 under the moderate scenario, compared with 50.6 Mtce in 2020 and 122.1 Mtce in 2025 under the advanced scenario. Policy suggestions are provided accordingly