China Faces Coal Sector Dismantling Costs
On a dusty afternoon in the northern reaches of China, dozens of giant trucks line up to fill up on coal for washing and processing. Others are poised to remove vast quantities of waste rocks and dirt. At any large, open-pit operation, one might expect to see a bustling workforce; however, the scene at the Yimin mine in Inner Mongolia is strikingly different. Here, massive machines operate autonomously, devoid of human presence, exemplifying a swiftly expanding fleet of autonomous vehicles across the nation. Many of the men who once drove the trucks for state-owned China Huaneng Group Co. now work away from the coalface, often serving as safety supervisors or control room operators. This image captures the essence of China’s most significant challenge in its energy transition. Solar farms are proliferating, green technology is advancing rapidly, and the dirtiest fossil fuel will ultimately be phased out. However, this still presents the government with the challenge of dismantling a large economic framework established for the extraction, distribution, and combustion of coal — along with the pressing issue of how to address the needs of the workers who were once part of this system. According to the Shu Yinqiu, technological advances mean safety and efficiency, not job losses. According to the reports, China accounted for nearly half of the 6.1 million people employed in coal mining globally last year, with additional employment in related industries such as power. And concentration can be remarkably sharp. In the province of Shanxi, where over a third of the nation’s coal workforce is employed, it is projected that up to 350,000 jobs will be lost from this year until 2030, as stated in a 2024 report. When taking into account the ripple effect on the broader economy, job losses in associated sectors within the northern region may exceed 1.5 to 1.7 million by 2030. Green industries have generated over 7 million jobs, and there will ultimately be net growth in employment as a result of the energy transition — yet this is not the reality for many in the coal belt, particularly older workers.
“Coal remains deeply embedded in the economic and social fabric of many Chinese communities,” stated Gang He. “A transition away from coal is therefore not only an energy transformation, but also an economic and employment transition that must be managed with care.” Coal has been intricately linked to the Communist Party’s history and its endeavors to reshape China’s economy over the past decades. Affordable, abundant, homegrown energy — along with a substantial industrial workforce — served as the foundation of the nation’s initial growth and continue to be essential. However, although industrial transition is not a novel challenge — with numerous instances of failed attempts, ranging from the Appalachian region in the US to the valleys of South Wales in the UK — the magnitude is entirely distinct in an economy that stands as both the largest consumer and producer of coal. China has already experienced surges of public outrage. In 2009, a labor protest escalated tragically when workers at the Tonghua Iron & Steel Group killed a manager, driven by concerns that a private takeover would lead to job losses. The provincial government ultimately abandoned the buyout, leading to the company’s absorption by another state-owned entity. Experience from other contexts indicates that poorly managed transitions lead to setbacks in progress. Consider US Senator Joe Manchin, a conservative Democrat, who modified the most ambitious US climate legislation to date in response to voter concerns regarding the decline of coal mining in his state of West Virginia. If that were to occur in the world’s leading polluter, there would be serious consequences for the global climate struggle. “The ability of China to manage this transition in a rapid and just manner will have a significant impact on how it and, to a large extent, the world use energy and address climate change,” Gang said.
As of now, there remains no cohesive official strategy to address the social and economic repercussions. Instead, Beijing has developed numerous national and regional policies in sectors reliant on resource extraction. The mid-2010s saw an acceleration of those efforts, as overcapacity issues led to industry consolidation and the widespread closure of smaller mines. The ensuing ambiguity is concerning, particularly as the government retreats from its most assertive interpretations of its strategy to initiate a reduction in coal usage. In October, party officials announced plans to promote a peak in coal use during the 2026-2030 period, marking a slight yet significant shift from President Xi Jinping’s April 2021 speech, in which he stated that the country would phase it down during that timeframe. Even reaching a peak would not signify a swift drop in consumption; rather, it would probably be succeeded by an extended plateau. The State Council stated last month that coal would continue to be the primary energy source for the nation, as China leverages its flexibility to manage intermittent renewables while gradually decreasing its reliance on coal. New coal-fired power plants continue to receive approval and are being constructed to accommodate the variable output from the swiftly expanding array of wind and solar farms. “We are making significant strides in the development of new and clean energy. But to guarantee power is available, we’re not totally giving up on coal,” said Ren Yuzhi.
China’s current initiatives to transition workers away from coal indicate a prolonged conclusion. Consider Fuxin, a city with a population of approximately 900,000 located in the northeastern rust belt province of Liaoning, recognized as the first site to experience a so-called “just transition” with Chinese characteristics. Coal mining commenced in this region approximately 200 years ago during the Qing Empire. It expanded rapidly, incurring significant human costs, under Japanese occupation during World War II. Fuxin’s Haizhou open-pit mine held significant importance in China’s economy, earning a place on the five-yuan banknote in 1960. The site ceased operations in 2005, its reserves exhausted following over fifty years of activity. At that point, officials had commenced the allocation of billions of yuan towards sectors such as agriculture, wind power, and tourism. The Haizhou pit, measuring 4 kilometers (2.5 miles) in length and 2 kilometers in width, has been designated as a national park, with the local government actively working on the development of a scenic eco-trail. However, the residents of a town where the mine once provided employment for nearly every household express a range of mixed emotions. During a recent visit, they characterized the city as comfortable, noting its affordable housing and reasonable cost of living — yet it lacks the vitality and job creation it once boasted.
Zhang Haotian reflects on the past, even as the mines had closed long before he embarked on his journey to university in the US and subsequently established a school for training coffee-shop baristas in the tech hub of Shenzhen. He divides his time between the city and has launched his own cafe, showcasing premium brews and American cuisine — yet the majority of his school friends have departed in search of greater opportunities in larger urban centers. “The city lacks a core source of income for economic development,” Zhang stated. “There are no tech companies here.” According to researchers, Beijing has initiated numerous policies and initiatives focused on workforce redevelopment, economic diversification, and environmental reclamation in cities reliant on resources. Their findings indicate that those policies, in certain respects, exceed the scope of transition planning observed in numerous other countries. Nevertheless, the government also has a tendency to allocate resources via state-owned coal companies. This frequently results in increased investment in associated sectors, such as coal-to-chemicals or metallurgy, thereby extending local economies’ dependence on coal. Opportunities for training in alternative roles are scarce, causing employees to worry that they have been overlooked. “The Chinese government has primarily focused on reducing the burden of coal businesses rather than that of coal workers and communities in the coal transition,” the two academics wrote in a study published in 2024. “This includes encouraging coal enterprises to merge and reorganize, and urging banks and financial institutions to provide credit and loan support to competitive firms in the sector.” In a clear demonstration of the situation, Fuxin is once more placing its bets on coal. In October, state-owned China Datang Corp. resumed construction — after more than a decade of delay — on a 25-billion-yuan ($3.5 billion) chemical plant that will convert fuel from Inner Mongolia into natural gas. The coal-to-chemicals industry generates employment opportunities in mining regions, while also providing the significant advantage of reducing the nation’s reliance on foreign energy sources by replacing oil utilized in conventional petrochemicals production. It is also significantly polluting, with emissions that greatly exceed those from conventional processes utilizing gas or petroleum. Another significant transition experiment is underway in Datong, the nation’s coal capital, located in the heart of Shanxi province, a mining region that produces more of the fuel than any country outside China. In this region, coal remains the dominant force.
Numerous mines continue to litter the periphery of the city. The roads are bustling with distinctive red trucks, coated in a layer of dust, transporting coal to a railway that links to a port 650 kilometers (404 miles) away, facilitating distribution along the eastern seaboard. However, Datong has invested billions of yuan into tourism. Near the Yungang Grottoes, a remarkable collection of Buddhist temples and caves carved from sandstone over 1,500 years ago, shops and hotels have been established. The city has allocated approximately 16 billion yuan for a resettlement initiative aimed at relocating coal workers from dormitories adjacent to mines to a community referred to as the Heng’an New Area. Currently, approximately 300,000 residents inhabit the area, residing in mid-rise apartments amidst lively streets, open-air markets, restaurants, and bars. Transitioning away from the mines has yielded additional advantages as well. “We have blue skies now,” stated Ren Jinyou. “When I was a child, my white shirt’s collar turned black after a day spent outdoors.” agrees Zhao Hong “It’s brought another dimension to the city’s economy.” During the summer, the grottoes experience a surge in lunchtime bookings from new visitors. However, tourism remains seasonal — and the city’s mines persist in producing 159 million tons annually, surpassing Germany. “It’s impossible to replace coal overnight,” she stated. The city continues to be subject to the unpredictable nature of the industry. A series of mine closures following a phase of oversupply in 2016 led to a population decline of 200,000 individuals in the 2020 census, bringing the total to approximately 3.1 million. A surge in prices in 2021 led to a temporary recovery, yet a subsequent decline this year has resulted in pay reductions, with market vendors expressing concerns that consumers are reducing their purchases to manage their budgets. Ren observed that the city’s identity is already in flux, as younger individuals pursue opportunities in larger urban centers. “Coal is like weather to us — when it’s good, everything thrives,” he stated. “When it’s weak, it affects us all.”
