Shanxi, China, 27 January 2026 — Shanxi province, the heart of China’s coal industry, could be hit with a sharp demand cut of nearly 30 million tonnes of metallurgical coal, also known as coke, by 2030, as the country’s steel industry accelerates its decarbonization efforts. Researchers and climate activists call for the provincial government and the coal industry to immediately and proactively develop action plans for an early phase-out.
Two new studies jointly released by Taiyuan University of Technology, Green Action from Hebei, and People of Asia for Climate Solutions (PACS) examine both the climate challenge and the social response to industrial transition in China’s steel and coking sectors. The findings highlight how industrial transition, when carefully managed, can support China’s climate goals without triggering social instability.
Shanxi has long been one of China’s most important coal, coke, and steel production bases. According to official statistics, in 2023, the ferrous metal smelting and rolling processing industry, mainly steelmaking, accounted for 11.49% of the province’s total industrial operating revenue and 5.57% of industrial employment, while the petroleum and coal processing industry, mainly the coking industry, contributed 7.94% of industrial revenue and 4.24% of industrial employment. Together, these sectors form a tightly interlinked industrial system that has supported local growth for decades and now faces growing pressure to change.
Blast furnace at a steel mill in Shanxi, China
The first study, Tightened Choke on Shanxi Coke as Local Steel Decarbonizes, estimates that by 2030, coke demand within Shanxi could decline by around 4.65 to 6.32 million tonnes, depending on whether electric arc furnaces account for 10% or 20% of steel production.
In Hebei, China’s largest steel producer, it will likely drop by around 20 million tonnes, as China advances toward lower-carbon steelmaking (through EAF, hydrogen-based metallurgy, and efficiency improvements).
“China has only 5 years left to deliver its carbon emission peak target. As the power sector cleans up through clean renewable energy uptake, the heavy industries, including steel making and coking, are the next in line,” said Pei Zhao, Senior Energy Transition Campaigner at PACS. Tightening environmental standards and changing domestic and global steel markets will further make the situation for the coke industry worse.
Coal handling at an open-air site
The second study, Unlocking the Choke: How an Early Metallurgical Coal Phase-out in Shanxi Could Pave the Way, notes that the coking industry's contribution to GDP now accounts for less than 10%. Data from the report reveals that despite its massive physical scale, the relatively low economic dependence of Shanxi on the coking industry, compared with thermal coal, suggests that an organized phase-out is both technically feasible and economically affordable for the province. The research outlines three proactive transition scenarios: “Phase-out by 60” (2060), “Phase-out by 50” (2050), and “Phase-out by 40” (2040). The report emphasizes that while proactive transformation may cause short-term pains, the impacts can be kept manageable overall through fostering alternative industries.
“Passive waiting will lead to rising transformation costs and loss of initiative, as well as worse societal shocks,” said Associate Professor Jingna Kou of Taiyuan University of Technology, lead author of the Unlocking the Choke feasibility study. “Proactive planning is a more rational strategic choice.” The experiences gathered by the phase-out in the coking industry can become critical lessons for the overall coal phase-out for Shanxi, Kou added.
Why Early Action Matters for China’s Climate Targets
This action is especially relevant to China’s climate goals of peaking carbon emissions before 2030 and achieving carbon neutrality by 2060. In September 2025, China announced its Nationally Determined Contributions (NDCs) to reduce economy-wide net greenhouse gas emissions by 7 percent to 10 percent from peak levels by 2035. Cutting emissions from heavy industry, especially steel, is essential to meeting these targets, yet progress in this sector has been slower than in others, such as the power sector and transportation sector.
Hydrogen-based shaft furnace at a coking plant that has been shut down
By tackling emissions at the core of steelmaking, Shanxi’s transition supports China’s broader effort to stay on track toward its national climate commitments. China is the world’s largest steel producer, which means changes in how it makes steel will influence global emissions and climate efforts.
“With the in-depth advancement of China’s updated NDCs, the transformation of the coking industry is no longer optional,” said Zhao. “It is a mandatory requirement to align local economic structures with China's global climate commitments.”
A Just Transition for Workers and a Benchmark for Global Resource Regions
The studies also emphasize the importance of managing social impacts. Shanxi’s coking industry employs more than 300,000 people, with operations concentrated in cities such as Lvliang and Linfen.
Rather than abrupt shutdowns, the feasibility study highlights policy tools such as worker transition and resettlement mechanisms, vocational retraining linked to local growth sectors, job-matching systems, and transitional income support. Several large enterprises have already begun testing approaches, including internal job transfers, phased retirement, and entrepreneurship support.
Coking coal factory workers in Shanxi
Because China produces more than half of the world’s steel, what happens in Shanxi matters far beyond provincial borders. The experience emerging from China’s coal heartland offers a broader lesson for heavy industry worldwide: climate action is most effective when change is planned early, managed carefully, and grounded in the realities of workers and communities.
Download and read the reports:
Tightened Choke on Shanxi Coke as Local Steel Decarbonizes
Media Contact:
Leovy C. Ramirez (she/her)
PACS Communications Officer
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