Promoting the green transformation of the construction industry is to achieve the “dual carbon” goals, and environmental regulations are a typical policy tool that needs to be explored in more detail for its effects and underlying mechanisms. Carry out empirical studies to investigate the impact of environmental regulations on the construction industry in China on green total factor productivity (GTFP) and determine whether technological innovation moderates this effect. Provincial panel data in China are used for this study, and a two-way fixed-effects model is employed in the baseline regression; at the same time, to address endogeneity problems, methods such as stepwise regression and lagged variables are also used to ensure the robustness and reliability of the estimation results. Research shows that (1) Regulations on the environment positively and significantly affect the total factor productivity of the construction industry. The above tests have failed to establish endogeneity; therefore, it can be concluded that reasonable environmental regulations can promote the development of a green and efficient economy in the industry. (2) Mechanism analysis has also revealed that technological innovation has a negative moderating effect on the relationship between environmental regulation and GTFP, contrary to previous expectations. Therefore, although environmental regulations promote GTFP in a direct way, they also induce particular types of technological innovation that reduce the overall benefit of the regulations. According to the above analysis, the reason for this is that current technological innovation in the construction industry still has a prominent “end-of-pipe treatment” feature. Behaviors such as purchasing environmental protection equipment have relatively high compliance costs but do not promote the “innovation compensation” effect effectively. Therefore, rather than amplifying the positive impact of environmental regulation predicted by the traditional “Porter Hypothesis”, technological innovation is taking the form of an indirect “cost-effect” offset mechanism. It provides a theoretical basis and policy guidance for the government to optimize the design of environmental policies and promote the construction industry to reduce sources and improve processes.
