Promoting environmentally conscious energy policies to reduce carbon emissions is a mutual duty of the international community. Several cities or government regions have implemented strategies and means to reduce carbon dioxide emissions. New efforts focus on introducing green policies, which reduce the largest contributors of the carbon footprint in given regions or islands. This research develops a new approach combining the economic input-output life cycle assessment (EIO-LCA) and location quotient (LQ) approach to measure regional carbon footprint with unique industrial settings. The results enable government policy makers to accurately and effectively formulate policies that target critical contributors while matching expected economic development goals. The case study of Penghu Island in Taiwan shows that the transportation sector has the most significant impact on island-wide carbon emissions. The LQ-based EIO-LCA model is used to analyze the carbon emissions across nine industrial categories and target specific industries that will dramatically lower emissions through incentives and industrial restructuring.