Abstract: The potential of the vertical-horizontal well hybrid SAGD technique for developing shallow heavy oil reservoirs is gradually being realized. However, challenges remain in terms of low thermal efficiency and high carbon emissions in reservoirs with interlayers. Currently, there is limited research on the low-carbon strategy of coupling exhaust gas from steam boilers with the VH-SAGD technique. Herein, considering heterogeneity, a series of flue gas-assisted VH-SAGD experiments were conducted employing a high-performance 2D visualization model. The mechanism of enhanced recovery of flue gas in VH-SAGD and the effect of its injection methods were studied, with a focus on steam chamber development and oil saturation distribution. Crucially, the interlayer length was optimized to enhance oil recovery, providing a new perspective for well location design in heavy oil reservoirs with interlayers. The results showed that flue gas, as an additive, could fully exploit the well-type advantage of VH-SAGD. By supplementing energy at the reservoir top, flue gas effectively promoted steam chamber development, expanded the oil drainage area of VH-SAGD, and increased the oil recovery from 58.9% to 71.7%. The flow channels formed by pre-injection flue gas accelerated the early-stage expansion of the steam chamber while also inducing lateral migration of steam, slowing steam rise, and consequently increasing the heating range within the low-permeability layer. When the distance between the vertical and horizontal wells was set to twice the interlayer length, the negative effects of the interlayer were more effectively turned into advantages. Because when the lateral development distance of the steam chamber in the low-permeability layer slightly exceeds the interlayer, enhanced heating of the lower part of the reservoir occurred through vertical convection of rising steam and returning condensate. The research results contribute to reducing carbon emissions from steam-based heavy oil extraction while advancing the maturity of VH-SAGD.