The latest carbon monitoring for action (CARMA) survey found that coal-fired power plants in Taichung, Taiwan emitted 39.7 million tons of carbon dioxide (CO2). The Taichung plant was among the dirtiest power plants in the world in 2007. Of the various greenhouse gases associated with climate change, CO2 is the most frequently implicated in global warming. As the latest data was from 2007, this study applied the Grey forecasting model (GM) to estimate future CO2 emissions in Taiwan from 2008 until 2012. The forecasted CO2 emissions for 2008-2012 were 288.32, 298.12, 308.25, 318.72 and 329.55 million metric tons, respectively, and the average residual error of the GM(1,1) is lower than 10 %. Because the GM(1,1) predicted further increased CO2 emissions during the next five years, the Taiwanese government must formulate policies to control energy supply and demand in order to reduce CO2 emissions. We study recommend the following practices to control energy supply and demand: upgrade energy efficiency by strengthening transmission and distribution systems; by increasing the heat rate of thermal power plants; develop non-carbon and low-carbon renewable energy; promote forestation; environmental greenification; continuance seasonal electricity rates; and formulate energy tax policies to reflect environmental costs.