China is the world's second largest greenhouse gas emitter, and emissions from the road transport sector represent one of the fastest growing GHG sources in China. Taking previous research on China's projected future vehicle ownership and future CO2 emissions in the transport sector as a starting point, this paper reviews all recent environmental policies relating to the automobile industry and employs a scenario analysis to estimate different emissions inventories for different development strategies. The new policy scenario considers all possible mitigation options available to the road transport sector from a bottom up perspective and examines the effects for fuel efficiency improvement and the cost of these mitigation options - vehicle technology improvement, bus rapid transit system and fuel switching, through which the carbon dioxide emissions reduction potential is estimated. Not only does this paper indicate that a large emissions reduction potential exists in China's road transport sector, but it implies that vehicle technology improvement, especially engine technology is likely to be the most effective means to meet emissions reduction targets. This paper concludes by identifying key barriers to implementing those options in China and deduces the technical, financial and institutional aspects of the demand in China for national capacity building and international aid in order to achieve the emissions reduction goals. (c) 2007 Elsevier Ltd. All rights reserved.