Guiding China’s coal regions into the clean energy era
Transforming Shanxi and Shaanxi is crucial for China’s national climate goals. A new Agora study shows how sectoral strategies and coordinated policy can reposition these coal provinces into clean energy and manufacturing hubs.
With the launch of China’s 15th Five-Year Plan (2026-2030) – a critical policy cycle ahead of the country’s 2030 carbon emissions peak and 2060 carbon neutrality targets – the future of its coal-producing provinces is coming into sharper focus. At the same time, recent energy supply disruptions following escalations around the Strait of Hormuz have driven renewed growth in the country’s coal chemicals industry, with provinces such as Shaanxi experiencing an unprecedented wave of new investment in recent weeks. A new report by Agora Energy China, in collaboration with Agora Energiewende, highlights why transforming China’s coal regions will be decisive not only for meeting national climate targets but also for safeguarding long-term economic resilience and energy security.
Coal provinces at the centre of China’s transition
Shanxi and Shaanxi are two of the world’s largest coal-producing regions. Their coal industry chains account for one billion tonnes of annual carbon emissions – nearly twice the emissions of Germany – and over 90 percent of total provincial emissions. Agora’s new analysis maps where these emissions stem from, finding that they are driven primarily by coal-fired power, coking and steel production in Shanxi and coal power and coal chemicals industries in Shaanxi. Decarbonising these sectors will be essential for China to peak emissions by 2030 and will require targeted, sector-specific transition roadmaps.
At the same time, the coal-to-clean transition of these provinces cannot be achieved in isolation. Shanxi and Shaanxi sit at the core of China’s coal supply chain, providing energy and industrial inputs that power manufacturing centres across the country. Together they produce around 2,049 million tonnes of coal annually – comparable to the output of India, Indonesia and the European Union combined – and export roughly half of their coal and more than 30 percent of their electricity to other provinces. This makes them structurally embedded in China’s current energy system. Reducing emissions in these provinces therefore also depends on a broader decline in coal demand across the country, underscoring the need for stronger coordination between central and provincial governments.
Policy measures and the role of the 15th Five-Year Plan
The direction set by the new 15th Five-Year Plan (2026-2030) provides an important enabling framework to guide this transition. It aims to support the development of a “new energy system” centred on clean energy, with coal and oil consumption expected to peak during this period and non-fossil energy consumption projected to double from current levels within the next decade. The plan also highlights the reform of China’s “dual control” system – from managing energy consumption towards directly managing carbon emissions – which the report’s authors identify as a key opportunity for shaping provincial transition pathways. This shift in methodology and evaluation approach better aligns national strategy with expanding renewable energy and the orderly displacement of fossil fuels.
The plan is particularly important to coal-producing regions seeking to transform their industrial base. Within this framework, translating national direction into concrete, sector-specific measures will be critical. For Shanxi and Shaanxi, this means accelerating transition pathways in coal power, steel and coal chemicals to support industrial upgrading, expand renewable energy capacity and reduce dependence on coal-based industries.
Given recent shifts in China’s coal and green transition policies, alongside increasing volatility in global energy markets, clear and consistent signals from the central government will be essential to steer sub-national investment decisions and avoid long-term carbon lock-in. In particular, halting approvals for new coal-fired power plants and establishing transparent timelines for phasing down existing assets would help redirect capital towards clean energy and emerging industries, repositioning coal regions as hubs for advanced manufacturing and low-carbon technologies.
A blueprint for an equitable coal transition
Handled well, the transition in China’s coal provinces could become an important global case study. Many coal regions worldwide face similar challenges in balancing energy security, climate goals and economic stability. The experience of Shanxi and Shaanxi could demonstrate how long-term planning, strong policy coordination and industrial transformation can enable coal regions to transition to a low-carbon future in a way that is both effective and equitable.
The 74-page study in Chinese Transitioning coal regions in China: evidence from Shanxi and Shaanxi, was conducted by Agora Energy China and Agora Energiewende, in collaboration with Shanxi Coshare Innovation Institute of Energy and Environment in Shanxi and the China Coal Society in Shaanxi. The full study, with an Executive Summary in English, is available for free download below.
