Use of coal may be falling in China, but it remains a major energy source and pollutant.

Residential heating comprises just 2.6 percent of China's coal use, according to the National Bureau of Statistics.

Every winter, major cities in northern China are heated through coal-fired power stations, but in certain climatic conditions smog can be trapped. For example, in Shenyang, Liaoning province, PM2.5 levels rocketed to well over 1,400 on Nov 8.

Measures have been taken to reduce coal use, and in Beijing the authorities now spend about 8 yuan ($1.30) on every cubic meter of natural gas supplied to homes.

This has helped to reduce what was once a household average of two to three tons of coal being used for heating every year.

In other Chinese cities, despite the obvious environmental benefits from converting to gas or electricity, the financial subsidies this entails are formidable.

In rural areas, nearly all farmhouses are heated by coal but as the country undergoes urbanization, changes are taking place.

Han Xiaoping, CEO of China5e.com, cited as an example the 22 villages in suburban Beijing that have been converted to gas heating this year.

Han said if China's 600 million rural residents can use less-polluting and wasteful energy sources, the nation can reduce coal use by at least 600 million tons annually.