In this paper, energy consumption characteristics and energy intensity in Shanghai were analyzed. Status of carbon source and carbon sink in Shanghai were estimated using the existing known methods. Result shows that the total carbon emission varies significantly depending on the share of renewable energy in energy mix. The carbon emission in Shanghai increased but carbon emission per unit GDP in Shanghai dropped, a result of energy efficiency improvement. Further reduction of carbon emission per unit GDP is dependent on policy innovation, new technology breakthrough or transformation of social economic pattern.The carbon sink in Shanghai is expected to maintain at the current level or achieve some increase in the future, depending on the implementation efforts of policies and technology innovation. The current policies related with carbon emission reduction were summaried. Some suggestions on related policy were proposed.