Abstract: It is necessary and fundamental to construct the mechanism of energy conservation and emission reduction by making quantitatively analysis of environmental externality. This paper first applies choice experiment to elicit resident willingness to pay for thermal power industry pollutant and carbon dioxide reduction. Then, combining with carbon dioxide emission of thermal power industry that is assessed by life cycle method and carbon trading price, the actual market value of carbon dioxide externality is calculated. The results show that respondents have the willingness to pay more for cleaner power generation, and the environmental externality of China's thermal power industry is 0.12~0.19 Yuan per kWh. Moreover, the results also indicate that the factors affecting the evaluation results of environmental externality include public environmental sense, socioeconomic variables and preference for environmental attributes.