Environmental regulation in China aimed at reducing carbon emissions may not necessarily lead to increased innovation among businesses in different regions. A study using a quasi-experiment and dynamic panel data models found that the Porter effect, which suggests that environmental regulations can drive innovation, was not observed in this case. The reason for this could be the pollution heaven effect caused by the carbon emissions trading pilot policy. The study also showed that there is no clear relationship between environmental regulation and the Porter effect, and that different regions in China may require tailored environmental regulation strategies based on their unique characteristics.