Technological Advancement, Environmental Regulations, and Sustainable Development: The Role of Energy Efficiency and CO 2 Emissions

ABSTRACT In the context of rapid technological advancement and the global pursuit of sustainable development, environmental regulations have become a central policy instrument for mitigating carbon emissions in energy‐intensive sectors. This study examines how mandatory and incentive‐based environmental regulations influence carbon dioxide (CO 2 ) emissions and energy efficiency (EE) in China's logistics and transportation sector. Using balanced provincial panel data for 30 Chinese regions over the period 2005–2019, we employ unit root and panel cointegration tests followed by quantile regression to capture heterogeneous regulatory effects across the emissions and efficiency distribution, complemented by endogeneity and robustness analyses. The results reveal pronounced distributional heterogeneity. Mandatory environmental regulations significantly reduce CO 2 emissions, particularly in the lower and middle quantiles, indicating a compliance‐driven mitigation effect. In contrast, incentive‐based regulations exert a stronger positive impact on EE in higher quantiles, reflecting innovation‐induced technological upgrading and increased investment in research and development. These findings suggest that EE acts as a key transmission channel linking regulatory design to environmental outcomes. Overall, the study highlights the importance of instrument‐specific and region‐specific environmental governance in promoting low‐carbon logistics and sustainable industrial transformation. Well‐designed regulatory mixes that combine enforcement with innovation incentives are essential for advancing China's carbon‐neutrality objectives and the Sustainable Development Goals (SDGs).