The paper analyses possibilities for CO2 emission reduction into the centralized district heating system by using the index decomposition analysis: Kaya identity equation. The classical Kaya equation is complemented with an energy efficiency indicator of a district heating system. The paper focuses on the impact of the Kaya equation components on the CO2 emission reduction. The elaborated methodology is tested in order to analyze possibilities for CO2 emission reduction at district heating systems in Latvia. 3 scenarios were formed for the forecast of the CO2 emission reduction. In case the current model for the state development is continued (scenario1) CO2 emissions will be reduced for 13%; however, in the scenario of orderly and balanced DH systems they will reduce for 29% by 2020 as compared to 2012.