Moving to a sustainable industry and weaning electricity supply off coal are critical to mitigate ambient air pollution and climate change. This is particularly true in China which is globally the largest manufacturer and relies heavily on coal-fired electricity. Research that explores the linkages between industrial electricity use and the electricity supply sector to curb air pollution is limited. In this study, an integrated modeling framework is developed that quantifies the impact of industrial electricity savings on the evolution of the coal power plant fleet in China, and on air pollutants for the different power grids in the period 2016–2040. The framework includes a rich set of efficiency technologies and detailed unit-level information (geo-coordinates, thermal efficiency, environmental performance). We find that the reduced electricity load due to the industrial efficiency improvements can effectively scale down the coal power fleet, and most importantly allows closing the most polluting units. The potentials for electricity savings vary amongst the industrial sectors and provinces, resulting in significant heterogeneity of coal plant phaseout per power grid. Because energy-intensive industrial plants are mostly found in the North, Central and Northwest grids, these three grids provide 66% of the total displaced coal capacity. The closing of coal units leads to a variation in annual emission reductions per power grid of 13–85 kt-SO2, 19–129 kt-NOx, 3–17 kt-PM and 21–167 Mt-CO2, compared to business-as-usual emissions. The iron & steel, aluminium and chemical sectors, together contribute to 84% of the total electricity savings by 2040, and are thereby most important to target.