From the perspective of the development stage of China's economy and the context in which industrial restructuring is highly promoted in China's "Twelve Five-Year Plan", industrial structure adjustment is an effective way to balance economic growth and carbon reduction. The current study analysed the effects of industrial restructuring on carbon reduction in Jiangsu Province. Using input output analysis, we calculated both direct and indirect carbon emissions in 1997, 2000, 2002, 2005 and 2007. The study aimed to classify Jiangsu's industrial sectors by the carbon reducing potential (CRP), which was indicated both by carbon reducing efficiency (CRE) and by the amount of carbon reduction (ACR), with a 1% decrease in the output of a certain industrial sector. The results indicate that the high CRE of a certain sector might be due to its high direct carbon intensity, indirect carbon intensity or high economic status. Based on the varying contexts, corresponding policy measures were provided. Moreover, export carbon emissions were abundant in sectors with the highest CRE, indicating the production of emissions due to consumption elsewhere. (c) 2012 Elsevier Ltd. All rights reserved.