Ordos City is currently working on introducing a coal resource compensation fee for "exported coal" to cover environmental damage, infrastructure development, and other related costs. The proposal, which aims to enhance the compensation mechanism for coal resources, has recently been approved by the Ordos municipal government and is now under review by the Inner Mongolia Autonomous Region authorities. The city initially plans to impose an additional 3-5 yuan per ton on "foreign coal," with the collection method likely tied to transportation projects, possibly placing the levy in the transport sector. A significant portion of China's coal reserves—about 39%—is located in Ordos, where the coal is shallow, easy to extract, and of high quality. Major state-owned enterprises like China Shenhua and China Coal have long operated in the region. However, when asked about the new policy, Huang Qing, secretary of the board of directors at Shenhua Group, said he had not seen the documents and declined to comment. An official from the Ordos City Government confirmed that the increase in coal resource compensation is aimed at covering extraction costs and promoting local coal conversion to reduce reliance on coal exports. Compared to Shanxi’s reputation as the "coal capital," Ordos faces challenges in balancing taxation and resource management. Before 2001, during a period of low coal prices, Ordos struggled economically. But after coal prices surged, the city saw a boom, with many becoming wealthy overnight. Today, the coal industry is the main source of Ordos’ fiscal revenue. However, much of the tax revenue remains controlled by large central enterprises, limiting the city’s ability to fully benefit from its own resources. The Ordos Development and Reform Commission recently released a report highlighting the low coal tax rate—only 9.74 yuan per ton—compared to Shanxi’s 26.6 yuan per ton. The commission argues that current coal taxes fail to fulfill three key functions: mediating income disparities, promoting resource conservation, and generating revenue. Additionally, the "Coal Sustainable Development Fund," a major component of Shanxi’s coal taxation system, is not available to Ordos. Environmental costs are also a growing concern. In Ejin Holo County alone, coal mining has caused farmland collapse and loss of forest and grassland, resulting in over 80 million yuan in economic losses. Local companies like Wanli Coal compensate farmers and herders annually, but the burden on the city remains significant. According to officials, Ordos mines around 200 million tons of coal yearly, with 70% exported out of the region. This export-heavy model puts pressure on the city’s environment and finances. A deputy mayor highlighted the environmental impact, including vegetation degradation, groundwater depletion, agricultural losses, and damage to local infrastructure. The city’s Development and Reform Commission estimates that environmental costs exceed the coal resource tax revenue. To address this, the city is proposing reforms, including increasing the coal resource tax from 3.2 to 5 yuan per ton, boosting annual revenue by 250 million yuan. Additional measures include reforming coal mining rights and establishing a "Sustainable Development Fund" similar to Shanxi’s, potentially generating 2.5 billion yuan annually. Ordos plans to implement these changes gradually, starting with an extra 3-5 yuan per ton on exported coal, aiming to collect 400–600 million yuan yearly. The goal is not only to cover environmental costs but also to boost local coal processing and reduce reliance on external transport. By the end of the "Eleventh Five-Year Plan," Ordos aims to convert over 70% of its coal locally into electricity, methanol, and other products. While coal prices continue to rise, the city seeks to balance local development with national energy needs. Officials claim these reforms will not disrupt national supply, but the China Coal Industry Association is closely monitoring the situation, emphasizing the need for a broader perspective on coal as both a local and national asset.

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