In Asia, small and medium scale industries (SMIs) form a significant number of establishments contributing to economic growth, stimulating indigenous entrepreneurship, leading to overall development and serving as a training center for developing skills of industrial workers and entrepreneurs. Because of the nature of these enterprises with their inefficient use of energy and other resources, they contribute to local pollution and other environmental problems. Studies on the emission of carbon dioxide (CO2) from these industries are few, especially in developing countries. This article presents an estimation of CO2 emission due to energy (fuel and electricity) consumption in seven SMI sectors in Indonesia. The specific energy consumption and the energy intensity (energy use per value addition) of these sectors have been estimated. Results of the energy use survey and detailed energy audits show that the highest specific fuel consumption is found in the textile industry, followed by the fabricated metal and chemical industries, while the highest specific electricity consumption is found in the fabricated metal industry, followed by the textile and chemical industries. The highest energy intensity among small industry sectors is found in the food and beverages sector. CO2 emission from the SMI sectors of Indonesia was estimated based on Intergovernmental panel on Climate Change methodology by considering the emission from each audited factory and from the aggregated energy consumption data of the SMI sectors. The textile and fabricated metal industry contribute the highest specific CO2 emission. The analysis shows that the contribution of liquid fuels to CO2 emission is very significant in the SMI sector. The overall contribution by the small industrial sector is about 366,000 tons in 1993 compared to about 46 million tons generated by all industrial sectors.