In January 2019, the Shenzhen Institute of Peking University completed a study on coal-free zones in cities, which was supported by Energy Foundation China. This report analyzes how to develop and manage coal-free zones from the economics perspective, before it describes what the policy environment should be like if cities would love to eliminate coal in key industries. Based on Shenzhen’s practice of achieving coal-free city for air pollution control, this project also summarizes guidelines to establishing and managing urban coal-free zones for other cities. This is the first research in China that examines coal-free zones from the economics perspective and proposes policy recommendations accordingly.