Abstract The power battery industry in China is experiencing rapid development, with the swift expansion of capacity potentially posing challenges to environmental protection and carbon reduction. Using the development plan of the power battery industry in Yibin City as a case study, this paper employs the Material Flow Analysis and Tapio decoupling model to deeply explore the economic benefits and environmental burdens brought by the development of power battery key industry under scenarios, proposing optimized pathways to promote low-carbon industrial development. The results indicate that the industrial output value can increase from 92.1 billion CNY in the baseline year to 382.6 billion CNY in 2030, with carbon emissions rising from 0.55 million tons to 2.32 million tons. The adjustment of product structure has limited effect on carbon reduction in the power battery industry. In the short term, optimizing the energy structure has greater carbon reduction potential than improving energy efficiency, and clean energy utilization has the highest marginal carbon reduction effect. Implementing measures to optimize the energy structure and improve efficiency simultaneously can achieve weak decoupling of economic growth and carbon emissions, though strong decoupling is challenging to attain. The proportion of local renewable energy generation also impacts the low-carbon capability of the industry, suggesting that regions with abundant renewable energy should be prioritized for industrial layout. Promoting the decoupling of economic growth and environmental impact in the power battery industry can be facilitated by supporting environmental governance infrastructure, driving the green energy transition, and encouraging low-carbon technological innovation. JEL classification numbers: F062.2 Keywords: Power battery, Scenario analysis, Material flow, Economic environmental impact, Carbon emissions.