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This paper aims at identifying the factors that have influenced changes in the level of industrial CO2 in Iran. Environmental Problems, especially “climate change” due to significant increase in anthropogenic greenhouse gases, have been on the agenda since 1980s. Among the greenhouse gases, carbon dioxide (CO2) is the most important. By means of an algebraic decomposition method the observed changes are analyzed into five different factors: output level, energy intensity, fuel mix, structural change and residual. The results show that output and energy intensity had the most effect on increasing CO2 emissions. And CO2 emissions are possible to decrease without decreasing output if structure and efficiency energy and Fuel mix get improved.