Abstract: Based on vector error correction model(VECM),with the use of time series data from Shandong province for 1995-2012 ,the author empirical analysis on impacts of foreign direct investment(FDI) and trade openness on carbon emission intensity in Shandong province, the study finds:FDI had an inhibitory effect on carbon emission intensity, while foreign trade openness had a promoting effect on carbon emission intensity, and the latter’s elastic coefficient was 1.5 times as big as that of the former. The policy recommendations given in the paper were: upgrading of energy consumption access standards for foreign investment; Eliminating backward production capacity of domestic enterprises in a timely manner and preventing domestic enterprises from becoming “pollution heaven”; playing Shandong province’s demonstration and reference value, tapping into economical development potential of the region, as well as establishing and implementing ecological compensation system.

Key words: foreign direct investment, trade openness, CO2 emissions, Shandong Province, vector error correction model