China’s Coal Capital Is Transforming Into a Clean Energy Hub

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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By Felicity Bradstock – Jul 27, 2025, 2:00 PM CDT

Shanxi produced 1.27 billion tonnes of coal in 2024 but is rapidly expanding its clean energy capacity.

Major investments in solar, wind, and hydrogen projects are helping the province shift its energy profile.

While the transition promises environmental benefits, over 1.7 million coal-related jobs could be lost by 2030.

China’s coal hubs are some of the biggest in the world, with the Asian country having long relied on the fossil fuel for power and industry. However, some of these regions are now being transformed into green energy hubs, as China gradually reduces its reliance on coal in favour of renewable alternatives. One such region is Shanxi in the North of China.

In 2023, China produced around 4.71 billion tonnes of coal from over 3,000 mines. Coal is China’s biggest source of carbon emissions. However, with China pledging to achieve peak carbon dioxide emissions by 2030, and to net-zero carbon emissions by 2060, the government is gradually closing its coal mines as the country expands its renewable energy capacity. Following years of heavy investment in green energy, many energy experts expect that China might even achieve peak emissions ahead of schedule.

In 2024, China’s primary coal mining region, Shanxi, produced around 1.27 billion tonnes of coal, which is more than that of India. If Shanxi were a country, it would be the second-biggest coal producer in the world, after China. However, thanks to the government’s rapid renewable energy rollout, the country is growing to rely less on coal and is developing its green energy sector. China is developing more wind and solar power than the rest of the world combined, and its wind and solar power generation soared to almost 1,500 GW in April, exceeding its fossil fuel output.

In Shanxi, around one in ten people work in the coal and related industries. There are fears that as China shuts down its coal mines, many people in the province will be left unemployed. More than 1.7 million coal-related jobs are expected to be cut by 2030. In anticipation of the dramatic hit to the job market, Shanxi is developing other economic sectors, such as tourism and clean energy.

By the end of 2024, Shanxi had a total installed clean energy capacity of 61.89 GW, which is around the same as that of the United Kingdom. Over half of it came from solar power, which reached 34.8 GW last year. In Shanxi’s 14th Five-Year Plan (2021-25) for renewable energy development, the province set a target of a cumulative 30 GW wind capacity and 50 GW solar PV capacity in operation by the end of 2025, which is aimed at diversifying the province’s energy mix.

LONGi, one of China’s largest solar power companies, launched a solar panel factory in Datong in 2022, which employs over 160 people, with over half of its employees coming from the coal industry.

Several other companies have also established operations in Shanxi to support the transition from a coal region to a renewable energy hub. Meijin Energy, in Shanxi’s capital Taiyuan, is one of China’s largest private coke companies, with the capacity to process over 6 million tonnes of coal each year, and 11 million tonnes of coke. In recent years, Meijin has expanded its portfolio to include hydrogen, which is a byproduct of the coking process and can be used to fuel vehicles. Meijin now produces around 1,500 tonnes of hydrogen a year, much of which is used to power its transport. Previously, the excess hydrogen was burnt or discarded, which contaminated he air. However, the company has seen the potential of supporting the energy revolution in the region.

In 2024, the Chinese firm Shanxi International Energy Group signed a deal with a local government in northern China to produce 350,000 tonnes a year of green aviation fuel produced from wind-powered hydrogen, according to local reports. The $1.48 billion project is expected to include 1 GW of new off-grid wind power, which will be used to produce green hydrogen to be combined with sequestered carbon dioxide to produce e-kerosene, which is chemically identical to conventional jet fuel.

The project is expected to be developed over two phases. The first phase includes the development of 300 MW of wind power to produce 100,000 tonnes of green kerosene a year, and the second includes a further 700 MW of wind energy capacity, for a fuel output of 250,000 tonnes.

There is also international interest in diversifying China’s energy mix and helping the Asian country reduce its reliance on coal to support a global green transition. In 2019, the World Bank Group launched a $350 million project aimed at accelerating “Shanxi’s transition to a lower coal consumption and more diversified economy, and provide alternative employment opportunities, thereby mitigating global climate change and improving air quality.”

There is significant potential for China’s Shanxi province to transition away from a reliance on coal to renewable alternatives in the coming years. However, the closure of many coal mines will likely lead to significant job losses across the region. China could mitigate the risk of widespread unemployment in Shanxi by investing heavily in a just transition, training workers in the coal industry to take up roles in other energy sectors as the province expands its renewable energy capacity.

By Felicity Bradstock for Oilprice.com

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