Abstract In this study, we propose a novel integrated approach incorporating super-efficiency slack-based measure with undesirable outputs, difference-in-difference and propensity score matching difference-in-difference to explore the effects of carbon trading mechanism on green development efficiency in terms of impact direction, impact degree and impact mode. Taking the provincial data of China from 1999 to 2017 as an example, the empirical results show that China's green development efficiencies have upward, downward and U-shaped trends. Carbon trading mechanism, research and development intensity, and pollution control investment have a positive effect on green development efficiency. However, population capital, urbanization and degree of openness have a negative effect on green development efficiency.