Abstract: The industrial sector is the primary arena for China to achieve its carbon peaking and carbon neutrality goals, with energy costs serving as an important driver for energy conservation and emission reduction.This study uses a weighted calculation of energy costs, taking into account the structure of energy consumption and variations in energy prices, to empirically investigate the mechanism through which energy costs affect industrial carbon emissions.The results show that:(1)An escalation in energy costs significantly reduces both the total carbon emissions and the carbon emission intensity of the industrial sector.This finding remains robust to exogenous shock analysis and robustness checks.(2)In terms of impact mechanisms, the impetus for carbon abatement from energy costs operates through two channels.First, higher energy costs stimulate technological progress in the industrial sector, thereby increasing energy efficiency and consequently reducing the quantity and intensity of carbon emissions during production processes.Second, higher energy costs encourage the transition to intelligent industrial practices that optimize energy structures and thus reduce carbon emissions from energy consumption.(3)Heterogeneous analysis reveals that the carbon abatement effect of energy costs is stronger in labor-intensive, highly trade-exposed, and low-innovation industries.These findings underline the need to accelerate energy market reforms, to tailor energy efficiency enhancement and structural optimization strategies to industry specifications, and to effectively exploit the potential of energy costs for carbon abatement in the industrial sector.

Key words: energy costs, the industrial sector, carbon abatement, energy efficiency, energy structures