This study analyzes annual data from 257 Chinese prefecture-level cities (2003–2019) to investigate the impact of environmental regulations on carbon emission efficiency using a super-efficient data envelopment analysis (Super-SBM) model. Employing a two-way fixed effects model and a panel threshold model, it reveals significant regional heterogeneity in carbon emission efficiency: higher in the southern, eastern, and coastal regions compared to the northern, western, and inland regions. The study identifies a double threshold effect of environmental regulation on carbon emission efficiency, with the urban innovation index as the threshold variable, forming a “U” shaped relationship. In the eastern region, the impact of environmental regulation on carbon emission efficiency is insignificant at low to medium levels of urban innovation. In the central region, an upward trend in the “U” shape is observed. In the western region, although the positive effect of environmental regulation is mitigated by higher urban innovation, it remains significant. The study suggests that environmental policies should account for regional differences and adopt targeted strategies based on each region’s specific circumstances to achieve the “dual-carbon” goal.