Green transformation of energy use in China’s transport sector will promote sustainable development in the country. This paper extends the Bounded-adjusted Measure and Luenberger indicators to detect the performance of China’s inland transport sector across 2006–2015. In the framework, the climate change and traffic accident risks are taken as undesirable outputs. In addition, source-specific and variable-specific decomposition are proposed for investigating the sources of inefficiency and productivity, and quantifying the contributions of climate change and traffic accident risks. This paper opens up the “black box” of technological progress, identifying the different channels (i.e., quantity and time dimensions) through which affect economic growth. Therefore, policymakers can find out the most effective pathway to boost productivity growth and mitigate climate change and traffic accident risks in transport sector, which are ignored in the conventional framework.
Empirical results indicate great variances exist among 30 provinces in inefficiency scores, productivity change and technological progress. Hence, classified regulations help to tackle this issue. We cluster 30 provinces into 4 groups according to their technological progress along quantity and time dimensions. Variable-wise, CO2 emission-reduction and civil vehicles gains promote the TFP gains most. Also, we verify that economic development and environmental regulations can coordinate to promote the sustainable development of transport sector.