China's non-energy-intensive sectors have greater carbon reduction potential: Based on a three-tier SDA approach from energy substitution perspective

Energy substitution emerges as an effective approach for mitigating CO2 emissions, necessitating an in-depth exploration of its specific impact mechanisms. In this context, it is essential to revisit the role of non-energy- intensive sectors. Given the complexity of how energy substitution affects carbon emissions, we utilize an improved three-tier structural decomposition analysis (SDA) specification to unravel the factors shaping China's carbon emission dynamics with consideration of sector and energy type. Our decomposition results indicate that: (1) The energy-intensity effect primarily contributes to carbon emission reductions. (2) The energy-substitution effect has not yet been fully utilized, growing gradually with an unstable trend. (3) Replacing raw coal and coal products with other energy can effectively lower carbon emissions. (4) Non-energy-intensive sectors possess greater potential for carbon mitigation compared to energy-intensive ones. Our study underscores the critical role of non-energy-intensive sectors in the carbon reduction process facilitated by energy substitution. It also emphasizes that governments should consider industrial linkages and focus more on carbon emissions from non- energy-intensive sectors.