The environmental protection authority will introduce a series of energy saving measures so as to contain the discharge of sulfur compound which is a major air pollutant and cause of acid rain.
"Our initiatives will take effect at the end of next year," said Wang Jue, deputy director of the pollution control division, the Shanghai Environment Protection Bureau.
Power plants which use coal as a primary fuel produce half of the total sulfur compound pollutant.
Other sources include motor vehicle emissions and gas used for residential purposes. 
Although coal is still the main source of local industrial and residential energy, it will be gradually replaced by other energy sources such as natural gas and electricity.
Coal currently accounts for 60 percent of total energy consumption.
According to Wang, 30,000 families in Puxi will start to use natural gas instead of coal by the end of next year.
More than 200 kilometers of railway will be completed next year while motor vehicles on the road are going to face stricter controls.
Mopeds will not be allowed on the Outer Ring area from next year.
Seventeen local power plants using coal, all installed with desulphurization equipment, will be supplemented with wind and methane generators, officials said.
A wind-driving generator with the capacity of about 30,000 kilowatt-hours will start to operate next year in the coastal area of Nanhui District.
Zhao Penggao, director of Environmental Protection Industry Division, National Development and Reform Commission, revealed that sulfur compound pollution in China hasn't been well managed and more than a third of the country is affected by acid rain.
About 500 million yuan (US$60.2 million) will be spent renovating old power plants in China to include desulphurization equipment next year.