A　global　consensus　on　reducing　carbon　emissions　has　been　reached　to　combat　climate　change.　The　Chinese　government　has　clearly　stated　that　it　is　necessary　to　achieve　carbon　reduction,　pollution　reduction,　green　expansion,　and　economic　growth.　This　paper　aims　to　explore　the　complex　transmission　mechanisms　between　carbon　emission　trading　policy　(CET)　and　green　economy　efficiency　(GEE).　Based　on　the　framework　of　“structure-conduct-performance”　paradigm,　the　serial　transmission　mechanisms　are　analyzed.　On　this　basic,　time-varying　Difference-in-Differences　method　and　serial　mediation　effect　model　are　used　to　investigate　the　effects　by　utilizing　Chinese　provincial　data　from　2007　to　2020.　The　results　indicate　that　CET　has　a　significantly　positive　effect　on　GEE,　which　is　probably　achieved　through　cleaner　energy　structure　and　subsequent　promotion　of　innovation　input.　However,　there　is　no　significant　serial　mediation　through　high-end　industrial　structure　and　digital　input.　And　advanced　foreign　investment　structure　and　technology　transfer　also　do　not　serially　mediate　the　relationship　between　CET　and　GEE.　This　paper　explores　the　serial　transmission　mechanisms　between　CET　and　GEE,　which　contributes　to　advancing　“Porter　hypothesis”.　Furthermore,　this　paper　proposes　relevant　suggestions　for　improving　the　CET　to　enhance　the　efficiency　is　of　great　significance　for　policymakers.　Graphical　abstract:　(Figure　presented.)　©　The　Author(s),　under　exclusive　licence　to　Springer-Verlag　GmbH　Germany,　part　of　Springer　Nature　2024.