Based on the panel data of 30 provinces and cities in China from 2000 to 2017, this paper uses DID method to empirically test the energy saving and emission reduction effect and the impact mechanism of the carbon emission trading system. The results show that the carbon emission trading system is conducive to achieving the dual goals of “energy saving” and “emission reduction” in China's economy, and has experienced a series of robustness tests. The mechanism test shows that the improvement of energy efficiency and the transformation of energy structure are the important paths for the carbon emission trading system to achieve the goals of energy saving and emission reduction. Energy efficiency improvement played a role of 10.19% and 5.93% respectively in the realization of “energy saving” and “emission reduction” in carbon emission trading system, while energy structure transformation played a role of 48.87% and 52.95% respectively. This means that the main driving force for China's carbon trading system to achieve energy conservation and emission reduction comes from the transformation of energy structure, rather than the improvement of energy efficiency. The transformation of energy structure involves more macro and deep-seated issues, which provides policy enlightenment for China to accelerate the process of energy conservation and emission reduction, especially to fulfill the international commitments of carbon peaking in 2030 and carbon neutralization in 2060.