At the Crossroads: Balancing the financial and social costs of coal transition in China

The report analyzes the challenges facing Shanxi province as it transitions away from coal, highlighting the tension between national environmental goals and provincial economic dependence. It uses international case studies to argue that successful transition requires a comprehensive approach combining economic diversification, infrastructure investment, and social welfare to prevent long-term regional decline.

• Shanxi province is highly dependent on coal, with the industry providing 74 per cent of total industrial added value in 2015 and holding approximately 25 per cent of mainland China's coal reserves.
• Coal state-owned enterprises (SOEs) in Shanxi face severe financial instability, with an average debt-to-assets ratio of approximately 82 per cent and total debts equivalent to the province's total GDP as of December 2016.
• National policy in China is shifting decisively away from coal, evidenced by the cancellation or delay of at least 150 GW of coal-fired power projects between 2016 and 2020 and a five-year moratorium on new coal power projects in Shanxi starting January 15, 2017.
• The social cost of coal transition is significant, with restructuring plans estimating the loss of 5 million to 6 million jobs across China.
• International experience from South Wales shows that while inward investment agencies like the Welsh Development Agency (WDA) can create jobs, they may fail to benefit former mining communities if infrastructure and investment are concentrated in urban coastal centers rather than the valleys.
• Spain's use of generous early retirement schemes in Asturias effectively mitigated short-term poverty and preserved local consumption, but created long-term risks such as reduced incentives for retraining and increased rates of depression and alcoholism.
• Kentucky's use of a coal severance tax to fund economic diversification demonstrates that while such funds can support a wide range of community projects, there is a risk that funds are absorbed into general state budgets or spent in urban areas rather than the affected coalfield counties.
• The report recommends that Shanxi and other coal-producing regions establish comprehensive development plans, identify new non-coal industries, implement 'polluter pay' mechanisms via environmental taxes, and engage stakeholders in open dialogue.

APA

Bridle, R., Kitson, L., Duan, H., Sanchez, L., & Merrill, T. (2017). At the Crossroads: Balancing the financial and social costs of coal transition in China. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/crossroads-balancing-financial-social-costs-coal-transition-china.pdf

Chicago

Bridle, Richard, Lucy Kitson, Hongxia Duan, Lourdes Sanchez, and Travers Merrill. At the Crossroads: Balancing the financial and social costs of coal transition in China. International Institute for Sustainable Development, 2017. https://www.iisd.org/system/files/publications/crossroads-balancing-financial-social-costs-coal-transition-china.pdf.

Wikipedia

{{cite report |last1=Bridle |first1=Richard |last2=Kitson |first2=Lucy |last3=Duan |first3=Hongxia |last4=Sanchez |first4=Lourdes |last5=Merrill |first5=Travers |title=At the Crossroads: Balancing the financial and social costs of coal transition in China |publisher=International Institute for Sustainable Development |date=July 2017 |url=https://www.iisd.org/system/files/publications/crossroads-balancing-financial-social-costs-coal-transition-china.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bridle2017crossroads, author = {Bridle, Richard and Kitson, Lucy and Duan, Hongxia and Sanchez, Lourdes and Merrill, Travers}, title = {{At the Crossroads: Balancing the financial and social costs of coal transition in China}}, institution = {International Institute for Sustainable Development}, year = {2017}, month = jul, url = {https://www.iisd.org/system/files/publications/crossroads-balancing-financial-social-costs-coal-transition-china.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }