Improving　green　economic　efficiency　is　necessary　for　China　to　address　resource　shortages　and　achieve　sustainable　development.　Recent　research　has　focused　on　the　impact　of　the　Energy　Consumption　Permit　Trading　Scheme　(ECPTS)　on　environmental　pollution.　However,　there　has　been　little　research　on　how　the　ECPTS　affects　green　economic　efficiency.　Based　on　panel　data　from　282　cities　in　China　from　2004　to　2020,　this　study　employed　the　super-efficiency　SBM　model　to　measure　the　green　economic　efficiency　of　these　cities　and　the　DID　model　to　empirically　test　the　impact,　heterogeneity,　and　mechanisms　of　the　ECPTS　on　green　economic　efficiency.　The　results　indicate　that　the　ECPTS　significantly　improves　urban　green　economic　efficiency　in　China.　This　conclusion　still　holds　after　a　series　of　robustness　tests.　Heterogeneity　analysis　shows　that　the　ECPTS　significantly　enhances　green　economic　efficiency　in　central,　non-first-tier,　and　resource-based　cities.　Further　mechanism　analysis　indicates　that　the　promotion　of　energy　efficiency　during　the　sample　period　is　the　primary　driver　of　the　improvement　in　urban　green　economic　efficiency.　Finally,　the　research　results　provide　a　reference　for　policy-makers　to　support　the　implementation　of　the　ECPTS　and　enhance　urban　green　economic　efficiency.　©　2024　Elsevier　Ltd