Air pollution reduction policies can also mitigate CO2 emissions simultaneously in the industrial sector, but the extent of these co-benefits is understudied. We analyse the potential co-benefits for SO2, NOx, particulate matter (PM) and CO2 emissions reduction in major industrial sectors in China. We construct and analyse a firm-level database covering more than 75 thousand observations and scenario simulations are used to estimate the co-benefits. The findings show that substantial co-benefits could be achieved with three specific interventions. Energy intensity improvement can reduce SO2, NOx, PM and CO2 emissions by 26-44%, 19-44%, 25-46% and 18-50% respectively. Reductions from scale structure adjustment such as phasing out small firms and developing large ones can amount to 1-8%, 1-6%, 2-20% and 0.2-3%. Electrification can reduce emissions by 19-25%, 4-28%, 20-29% and 11-12% if the share of electricity generated from nonfossil fuel sources is 70%. The former two interventions have already been put into practice while the third intervention is regarded as a significant contributor for realizing China's carbon neutrality target. Since firm heterogeneity is the essential source for realizing the co-benefits and it directly determines the magnitude of the co-benefits, stricter and sensible environmental policies targeting industrial firms can accelerate China's sustainable transformation.China is seizing opportunities to achieve its climate commitment to the Pairs Agreement of UNFCCC, while the overall energy-related CO2 emission continues to rise after a small trough in 2016. Domestically, China has battled air pollution for more than thirty years 1 . Although great achievements have been made, China is still facing severe environmental challenges 2,3 . In 2018, only 121 out of 338 cities at and above the prefecture level met the national air quality standard 4 . Among all emission sources, industrial sectors contributed more than 80% of national sulphur dioxide (SO2) emission, more than 60% of national nitrous oxide (NOx) emissions 5 , and more than 80% of national carbon dioxide (CO2) emissions 6 ; therefore, it is still the first priority to strengthen

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