BEIJING, May 7 -- China will eliminate 77.79 million tonnes of outdated production capacity in coal sector and close down 1,254 coal mines in 2015, the country's energy watchdog said on Thursday.

The moves aimed to further scale back China's coal industry to curb its blind expansion and encourage use of renewable energy, said a circular jointly issued by the National Energy Administration (NEA) and State Administration of Coal Mine Safety.

While placing stricter standards in environmental protection, energy efficiency and safety, China will also encourage mergers and acquisitions in the coal industry to crowd out outdated capacities, according to the circular.

As China's economy is slowing down, overcapacity is posing an increasing challenge for policymakers to balance growth and reforms.

Coal consumption accounts for about 66 percent of China's primary energy consumption, 35 percentage points higher than the world average, according to the NEA.

The government plans to slash coal consumption by 160 million tonnes in the next five years, and to reduce energy intensity, or units of energy per unit of GDP, by 3.1 percent in 2015.