The present study was conducted to estimate the CO2 emission factor for the entire energy industry sector in Libya using life-cycle assessment methodology. The CO2 emissions were tracked along with the extraction, distillation and conversion of the energy flow chain. The present results are based on real monitored data collected during the energy flow process from the oil fields to the refinery and lastly to the power plant. Its shown that to generate 1MWh electricity, 291 kg of Diesel fuel has to be burn, which in turn, 1141 kg of crude oil should be refined. The CO2 flow chart has been drawn for this process, it found that the total CO2 emissions are about 983 kg CO2/MWh, the share of oil industry sector which comes extraction and refinery are 0.97 and 5.43% respectively and the rest is from the electricity generation. The obtained results showed wide differences between CO2 emission factors that were tabulated in inventories approved by many environmental agencies for all categories. Furthermore, the followed approach in this research has increased the CO2 emission factors by 6.7% compared to the traditional approach and will give opportunities for fair competition for other electricity generation alternatives (such as renewable energy resources). This approach gives engineering and economic new dimensions to deal with the environmental issues, so that, the concept of optimization of engineering design can be applied from an environmental perspective. Accurate energetic and environmental data were presented activate the climate change policies and mitigation strategies, which can help politicians and decision-makers to draw their environmental policies more effectively.