This　study　aims　to　examine　how　carbon　trading　policies　impact　total　factor　carbon　productivity　and　subsequently　provide　recommendations　for　sustainable　regional　development.　Through　analyzing　the　trends　in　total　factor　carbon　productivity　and　its　mechanisms,　this　paper　suggests　that　carbon　trading　policies　can　significantly　enhance　total　factor　carbon　productivity.　Additional　mechanistic　tests　reveal　that　carbon　trading　can　promote　technological　progress,　factor　accumulation,　scale　allocation　and　energy　substitution　effects;　all　contributing　towards　a　low-carbon　economic　transition.　These　four　effects　serve　to　both　promote　economic　growth　and　contribute　towards　carbon　reduction　targets.　Therefore,　to　encourage　low-carbon　and　high-quality　development　of　the　region＇s　economy,　policymakers　must　focus　not　only　on　constructing　and　expanding　carbon　markets,　but　also　emphasize　the　synergies　between　these　different　effects.　©　2023