<p>Environmental regulation can possibly enhance firm productivity through its competitiveness effects that can induce regulated firms to improve cost-cutting efficiency and to develop or adopt new technologies, known as the Porter Hypothesis, though there is still conflicting evidence reported. This paper examines the impacts of environmental regulation on firm productivity in China’s new energy industry by incorporating the mediating effect and boundary mechanism of green technological innovation and innovation openness within an innovation ecosystem. We find robust evidence that environmental regulation can enhance firms’total factor productivity (TFP) in the new energy industry with green technological innovation being the important mediator and innovation openness as the effective moderator. Our results also suggest that such positive impact of environmental regulation on productivity is region sensitive, with the eastern region being the most significant. These findings have important implications for China’s environmental regulations and policy, especially for its industrial strategy and policy on the development of new energy industry.</p>