In 2023, I embarked on a journey with a group of energy policy researchers from Beijing to visit several Chinese coal cities. We wanted to understand the implementation of China’s decarbonization policies in the heartland of coal mining. As we drove into a coal-rich town in western Shanxi Province, the narrow roads were filled with loud rumbling coal trucks. Amid soot-streaked buildings, newer homes housed families who were relocated from areas affected by coal mining subsidence. The town’s existence hinged on coal. Yet, this dependency has an expiration date — the local mines will be depleted in 10 to 15 years.

The Chinese leadership has long emphasized that economic reforms should “spearhead greater social fairness and justice and increased well being of the people.” At the recently held Third Plenum, China’s top economic planning meeting, carbon emissions reduction was at the top of policy priorities. However, the country’s ambitious carbon neutrality goals are testing the Chinese government’s capacity to decarbonize the energy sector and ensure equity in the transition.

My recent paper with Joanna Lewis on the politics of China’s just transition reveals that while Beijing has introduced policies to revitalize dying coal economies, the allocated resources often favor coal businesses over workers and communities. For a just transition, the Chinese government should accelerate investments to empower coal workers and communities. Some investments could support locally-led solutions in coal communities such as joint local government and nongovernmental organization (NGO) programming for job training and small business seed funding.  

China’s Approach to Tackling Coal Challenge 

China, the world’s largest coal producer and consumer, aims for carbon neutrality by 2060. Over 3 million people work in China’s coal sector, but decarbonization efforts could reduce the workforce to under one million, potentially causing economic stagnation in coal communities. In the 2010s, the government curbed coal production for air quality, introducing comprehensive plans in 2016 to address social and ecological challenges. After the Russian invasion of Ukraine in 2022 and other global tensions, China emphasized coal for energy security, hastening production in coal towns.

Over the past several decades, China has transitioned from relying on international technology transfer for renewable energy to becoming  a global leader in clean energy investment in 2011. Coal use for electricity generation decreased from 77% to 63% between 2000 and 2020. Partially prompted by the country’s war on pollution, in 2016, the State Council decided to phase out 1 billion tons of coal production, about one-third of its annual output. 

To manage the socioeconomic challenges of this transition, China’s National Development and Reform Commission (NDRC), State Council, Ministry of Finance, Ministry of Human Resources and Social Security, and provincial governments introduced policies regarding workforce development, environmental reclamation, and economic development in coal regions.

The justice-related policies emphasized alleviating the burden on coal-related businesses with tax reductions, insurance incentives, and financial subsidies, and a special fund for industrial restructuring. Coal mining enterprises scheduled for closure could trade their government-approved production capacity quotas to other companies  to compensate for asset loss. The NDRC’s latest action plan, released in July, promised increased government funding to decarbonize coal-fired power plants. Strikingly, few incentives exist to directly support coal workers and communities.

Envisioning a Life After Coal

Our conversations with miners revealed that many justice-related policies aimed at  providing a basic social safety net ultimately leave coal workers and communities unprepared for life after coal. Both workers and mine managers agreed that a strengthened labor contract law has made coal enterprises more cautious about layoffs and more responsible for co-paying workers’ social benefits and insurance, including health checks for pneumoconiosis. Access to these benefits largely depends on coal enterprises’ arrangements.

Many workers, particularly non-locals, are drawn to the coal industry out of necessity. Others return after failing to find opportunities elsewhere. Mining companies provide them limited training in underground mining skills and safety. Jingna Kou, a Professor at Taiyuan University of Technology, found that the labor market for coal miners in Shanxi is contracting and this trend will continue in the near term. Despite the uncertain, high-risk, and labor-intensive nature of the industry, miners seemed unwilling to leave unless forced by retirement or business closure. 

While national funding exists to assist resource-depleted cities in transition, town officials we talked to clarified that the funds are subsidizing a few local expenses for community infrastructure, environmental restoration of mining sites, and welfare. As seen in the United States and other parts of the world, the success of local communities in securing national funding often depends on the local capacity. 

As part of its industrial and green development strategy, China faces the herculean task of addressing climate change and transitioning from coal. There is an urgent need for the government to recognize the potential social and equity challenges faced by the coal communities and not just rely on enterprises to solve them. 

Strengthening Local Capacity for a Just Transition

As China moves towards its 2030 carbon peak and 2060 carbon neutrality goals, the future of coal towns in Shanxi remains uncertain. Coal businesses are being supported but coal workers and communities have few resources to build a new life away from the coal industry. 

The policy entrepreneurship of local governments is key in handling the low-carbon energy transition challenge. For example, Pingxiang in Jiangxi province successfully created a new leading electrical porcelain industry. In Shanxi, municipal and township governments have created high-tech industrial parks and attracted new industries and research institutes.

To ensure a just transition, the Chinese government should align its economic and social goals when assisting coal regions. Gordon Hanson, a Professor at Harvard Kennedy School, suggests providing centralized vocational training programs to equip coal workers with new skills and place-based solutions. It should also offer financial and technical support for small businesses and investment incentives for disadvantaged areas. To implement these solutions, central government funds could foster local entrepreneurship by financing and empowering local governments, grassroot leaders, and NGOs to develop community-level solutions for a fairer and more equitable coal transition.