China's heating industry is a coal-fired industry with serious environmental issues. CO 2 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 CO 2 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 CO 2 emissions reduction potential of the heating industry will be 26.