The study employed multiple regression analysis to examine China and the top countries in energy transformation and established policy intensity to assess policy stringency. It has been investigated how environmental policies affect the dynamic evolution of the nation’s energy system and technological innovation. It has been demonstrated that environmental policies have a favorable effect on technological advancement in the energy transformation industry. The national knowledge stock, national R&D spending, and other factors limit this impact, and the significance level is varied and lagging. Technology innovation in the field of energy transformation is impacted by the environmental regulations of industrialized nations. Technology innovation in energy transformation is encouraged by China’s environmental regulations’ institutional quality. The study also showed the boundary conditions and peak nodes of China’s carbon emissions. Three different forecasting models are utilized to estimate the impact of China’s economic development speed on energy transformation and to evaluate potential scenarios through the examination of macro time series data. Based on the constant dollar price in 2000, China’s energy intensity fell to $1 for 0.18 kg of standard oil to $1 for 0.32 kg of standard oil in 2050. To fully unleash the potential of China’s energy transformation, the report contends that China’s environmental policy structure has to be optimized.