China, as the world's largest CO2 emitter, faces immense pressure to curtail carbon emissions. This study explores the complex dynamics governing the interplay between diverse monetary policies, urbanization, energy usage, economic advancement, and China's CO2 emissions over 1978 to 2020. The Autoregressive Distributed Lag (ARDL) modelling advocated by Pesaran et al. (2001) is used for analysis. The empirical findings unveil a notably positive short-term linkage between urbanization and carbon emissions, contrasting with a significantly negative long-term association. Nevertheless, the relatively modest long-term elasticity reported suggests that China's urbanization has recently crossed the pivotal point of the inverted U-shaped Environmental Kuznets Curve (EKC). Furthermore, this study demonstrates that China's central bank, through judicious monetary policies, contributes to carbon emission reduction by channeling increased money supply into low-carbon and environmentally friendly industries. This insight counters the contention that expansionary monetary policies inevitably intensify CO2 emissions via economic expansion. Importantly, the study underscores the exacerbating impact of China's coal-driven energy consumption structure on CO2 emissions. While the EKC hypothesis garners only partial empirical validation in China's context, this research underscores the necessity for comprehensive and well-coordinated strategies that harmonize economic prosperity with environmental preservation.