With the rapid growth of China’s economic growth, a large number of greenhouse gas emissions have led to a significant increase in environmental pressure. Currently, China has not yet achieved a good balance between greenhouse gas emissions and economic growth. To improve the sustainable development of China’s regional economy and effectively control domestic CO2 emissions, research is conducted to analyze the trend of regional economic change based on carbon emission policies. This study looks for suitable paths to achieve sustainable development of the regional economy. In this study, CO2 emissions were incorporated into an economic model to calculate the Green Total Factor Productivity (GTFP) efficiency value and its growth rate in each region of China. This was done to examine the productivity of each region in China. and it also aims to discuss the driving factors behind it, so as to give relevant policy suggestions that can help China’s sustainable economic development. The ultimate goal is to achieve sustainable RE development. The method used to measure the GTFP efficiency was the slacks-based measure (SBM) based on the data envelopment analysis (DEA) technique. The regression analysis of the relevant drivers was based on the regression analysis of the panel data model. The research results show that the level of urbanization and industrial structure were the main influencing factors for the increase of CO2 emissions. Consequently, macro-regulation can appropriately reduce CO2 emissions. In addition, the implementation of carbon emission reduction policies such as industrial structure optimization, education investment, and market-oriented reform also promote the sustainable development of the regional economy. Therefore, appropriate carbon emission reduction policies can improve the level of sustainable development of the regional economy. It also can ensure the stability of the regional environmental level.