<p>The electric power industry occupies an important position in the economy development, however, a series of environmental problems have arisen during this time, so the research on the relationship between the reform of the electricity industry and carbon emissions is of great significance in realizing carbon reduction. Based on the quasi-natural experiment of the power plant grid separation policy implemented in 2003, this paper evaluates the impact of the policy on CO2 emissions by using carbon emission data and economic variable data at the county level, and further analyzes the impact mechanism. The results show that the implementation of the policy significantly increases regional CO2 emissions and per capita CO2 emissions, and the implementation of the policy increases regional CO2 emissions and per capita CO2 emissions by 0.5919 and 0.587 respectively, and this result is more significant in regions with larger power generation, dominated by thermal power generation, and coal dependent. The mechanism test indicate that the policy increases carbon emissions mainly by increasing the number of non-electricity enterprises and electricity consumption, and further analysis indicates that the implementation of the policy increases cross-provincial electricity transmission and creates inequities in environmental and economic growth between regions. The findings of this study may be useful for developing countries, such as China, to formulate reasonable electricity market reform policies and realize the healthy development of the electricity industry and environmental protection.</p>