The Chinese power industry’s CO₂ emissions account for the largest proportion of the country’s total CO₂ emissions. Therefore, studying the influencing factors of CO₂ emissions in the power industry and developing mitigation policies are of great significance for reducing CO₂ emissions. According to the electricity-related data from 2000 to 2014 in China, this paper employed the improved STIRPAT model to examine the impact factors of economic growth, urbanization level, industrialization level, power consumption efficiency, power generation efficiency, and electric power structure of the CO₂ emissions in China’s power industry. Then we adopted the Ridge Regression method to fit the extended STIRPAT model. The results show that power generation efficiency is a decisive factor of CO₂ emissions reduction. Electric power structure and economic growth play important roles in reducing CO₂ emissions. Power consumption efficiency has a large potential to mitigate CO₂ emissions, while urbanization and industrialization levels are less important impact factors. Based on the above conclusions, the Chinese government needs to formulate appropriate policies in terms of power generation, supply, and consumption to reduce the power industry’s CO₂ emissions.