Abstract Using provincial data on energy-related CO2 emissions in China from 1997 to 2014 and the CO2 emission Gini coefficient (CEG), this study evaluates China's spatial inequality in energy-related CO2 emissions. Further, we decompose this inequality and its variation from the perspectives of production and residential energy consumption, using the source decomposition and source increment decomposition methods. This paper presents a new CEG source increment decomposition method that can achieve complete decomposition. The results reveal a downward trend in China's overall, production sector and residential sector CO2 emissions inequality. Although the Gini coefficient of CO2 emissions from the residential sector is larger than that from the production sector, the contribution of the latter to the overall CEG is higher. The impacts of the spatial inequality of CO2 emissions from China's production and residential sectors depend on the type of energy. The concentration effect is the primary factor responsible for inducing changes in China’s overall and production sector CO2 emissions inequality, but it is not the only dominant factor for the residential sector CO2 emissions inequality.