We establish the link between energy use, air pollution, and public health impacts in Taiyuan for 2000, and for 2010 and 2015 under alternative scenarios. We find that in year 2000 more than 2200 excess deaths may have been caused by particulate matter (PM) pollution. Using alternative methods for monetization of health impacts the total health damage amounts to 0.8–1.7 billion Yuan, which is 2.4–4.9% of the city's GDP in 2000. Compared to the business-as-usual scenario, scenarios assuming extensive fuel switch in low-and-medium-stack pollution sources and extension of the district heating system could prevent 200–1100 PM10-related premature deaths in 2010 and substantially reduce population morbidity. The actual PM pollution in 2007 was lower than modeled in these two scenarios. We also find that if air quality in urban Taiyuan were to reach the Chinese National Grade II Standard in 2015, the number of premature deaths would still be around 1330 and the economic cost about 1–2% of the city's GDP in 2015. Our results imply that there are large health benefits to be gained by setting stricter standards for the future in China, and that targeting low-and-medium-stack source effectively reduces health damage.