Abstract: Faced with the increasing risks of Sino-US trade friction, Russia-Ukraine conflict, and global value chain breakage, China has begun to look more for the development of domestic greater circulation, which has a profound impact on energy consumption and utilization. This paper first constructs a domestic value-chain embedding index from the perspective of the source of the final demands by using the input-output model of province embedded in the globe, so as to measure the degree of participation in the domestic value chain circulation of each province and industry. Then, based on the three-dimensionaldata of 13 manufacturing industries in the 30 provinces of China from 2002 to 2017, it conducts an empirical study of the impact and mechanism of domestic value chain embedding on energy efficiency with the high-dimensional fixed effect model. The findings show that domestic value chain embedding will significantly inhibit energy efficiency. After taking into consideration such factors as replacing variables, changing clustering standard errors, eliminating sample extreme values, and using instrumental variables, this conclusion is still valid. The heterogeneity tests reveal that the negative impact of domestic value chain embedding on energy efficiency is more pronounced in the low-polluting industries, high-tech industries, years before 2008, and coastal regions. The mechanism test reveals that domestic value chain embedding will produce adverse effect on industrial structure and productivity, thus inhibiting the improvement of energy efficiency. Therefore, it is necessary to optimize the industrial layout of the domestic value chain, improve the level of division of labor and cooperation at all links, and promote the research, development and application of energy technology.

Key words: domestic value chain, energy efficiency, industrial structure, green total factor productivity