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China’s major coal-producing provinces require proactive policy planning paired with consistent central government signals to guide their transition towards carbon neutrality by 2060.
Halting new coal power plant approvals and setting a clear timetable for phasing down existing assets will be key to repositioning these provinces as clean energy and manufacturing bases. A coherent policy framework can enable coordinated economic and energy transitions at the provincial level.
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Decarbonising the coal industry chains in China’s major coal provinces is essential for the country to peak carbon emissions by 2030.
Coal industry chains in Shanxi and Shaanxi account for over 90% of provincial emissions; together exceeding 1 billion tonnes – nearly twice the emissions of Germany. The main sources are coal-fired power, coking, and steel production in Shanxi, and coal power and coal-chemical industries in Shaanxi. Achieving their 2030 peaking targets therefore requires clear, sector-specific decarbonisation roadmaps for these key industries.
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Emission reductions in these provinces also depend on lower coal demand across China.
Shanxi and Shaanxi together form the world’s largest coal-producing region, with a combined annual output of about 2049 million tonnes – roughly equivalent to the total production of India, Indonesia, and the European Union combined. Around half of this coal is consumed outside the two provinces, meaning their transition cannot be achieved locally alone. It requires national efforts to reduce coal use and coordinated action between central and regional governments.
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China’s shift in its “dual control” mechanism – from controlling energy consumption to carbon emissions – is an opportunity to reshape the provinces’ energy structures and accelerate industrial upgrading.
This change aligns with China’s updated NDC, which introduces absolute – rather than intensity-based – targets, marking a decisive shift to a new policy paradigm. Leveraging the new dual control can better align local energy and emissions management with national climate goals.
Transitioning coal regions in China: evidence from coal industry chains in Shanxi and Shaanxi
How China's coal provinces can shift from coal dependence to clean energy and manufacturing hubs, aligning regional transformation with national climate goals and economic resilience
Preface
China’s clean energy transition is accelerating, but major coal-producing provinces like Shanxi and Shaanxi require proactive policy planning paired with consistent central government signals to guide their transition. As China approaches its 2030 carbon peak and advances towards carbon neutrality by 2060, these regions – responsible for a large share of national coal output and emissions – will play a decisive role. This report highlights how evolving national policies, particularly the shift from energy to carbon “dual control”, create a timely opportunity to steer development away from carbon lock-in and towards low-carbon growth.
The analysis maps emissions across the coal industry chains in Shanxi and Shaanxi, showing that the vast majority stems from coal conversion and end-use sectors such as power generation, steel, coking and coal chemicals. These structural dependencies, reinforced by national energy security priorities, have deepened reliance on high-carbon industries. However, the new 15th Five-Year Plan (2026–2030) and China’s emerging carbon management framework offer a strategic window to accelerate industrial transformation, improve carbon accounting and align provincial development pathways with national climate targets.
By combining sector-specific transition strategies with stronger coordination between central and provincial governments, Shanxi and Shaanxi can reposition themselves as hubs for clean energy, advanced manufacturing and innovation. The report outlines practical policy recommendations – from carbon budgeting and coal phase-down planning to workforce transition measures –demonstrating how a well-managed transition can enhance economic resilience, reduce systemic risks and support sustainable growth in China’s coal regions. Its insights also offer valuable lessons for other coal-dependent regions worldwide seeking to balance economic development, energy security and decarbonisation objectives.
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Transitioning coal regions in China: evidence from coal industry chains in Shanxi and Shaanxi
Analysis in Chinese with English executive summary
