Many countries are attempting to reduce energy consumption and CO₂ emissions while increasing the productivity and efficiency of their industries. An undesirable-output-oriented data envelopment analysis (DEA) model with slacks-based measure (SBM) was used to evaluate the changes in the environmental efficiency of the transportation sector in 30 Chinese provinces (municipalities and autonomous regions) between 2003 and 2012. The potential for decreasing CO₂ emissions and energy saving was also assessed. Transportation was found to be inefficient in most of the provinces and the average environmental efficiency was low (0.45). The overall average efficiency reached a maximum in 2005 and continually decreased until a minimum was reached in 2009; since then, it has increased. In general, transportation is more efficient in eastern than in central or western China. A sensitivity analysis was also carried out on the input and output indicators. Based on these findings, some policies are proposed to improve the environmental efficiency of the transportation sector in China.