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The Coal Industry

Coal is a fossil fuel formed from ancient plant material and remains a major global energy source. In fact, coal is a sedimentary rock composed predominantly of carbon. It yields far more energy per unit mass than wood, which is one reason it became the primary fuel of the Industrial Revolution. Today, despite rapid growth in renewables, coal still powers about one-third of the world’s electricity and serves as a key fuel in steel and cement production. (In 2022, coal demand even hit an all-time high before recent declines.) However, coal’s share of global energy has started to shrink. For example, between 2009 and 2019 world coal consumption rose slightly, but its share of total energy fell from ~28% to ~26%, and its share of electricity generation dropped from ~40% to ~36.5%. These shifts reflect growing concerns over pollution and climate change, as well as competition from cheaper natural gas and renewables.

History of the Coal Industry

Coal mining has a long history. Early small-scale coal use dates back millennia, but coal’s importance exploded in the 18th and 19th centuries. It became the engine of the Industrial Revolution, fueling steam engines, factories, and railways. Large-scale coal mining developed in Britain and other industrial regions from the late 1700s onward. During the 19th and early 20th centuries, coal provided the main source of primary energy for industry and transport. In other words, cities, trains and ships ran largely on coal. By the mid-20th century, coal remained dominant in many countries, though oil and natural gas began to challenge it from the 1960s on. Even so, as recently as 2010 coal still generated over a quarter of the world’s energy, and in 2022 it was the single largest energy source for electricity, steelmaking and cement.

After World War II, oil and gas took over much of transportation and home heating, and in many advanced economies the trend turned away from coal. From 2009–2019, developed regions saw dramatic coal declines: for example, in the United States coal’s share of electricity fell from 45% to 24%, with natural gas and renewables rising in its place. In the European Union, coal’s share dropped from 31% to 15% of power generation in that decade. Overall, the global coal boom of the 2000s – driven by China and India – has given way to a plateau. In fact, analysis by the International Energy Agency suggests world coal consumption peaked around 2013 and is not expected to return to those levels. By contrast, coal use has grown mainly in developing Asia, driven by China and India, even as it fades in the West.

Coal Formation and Types

Coal begins as peat, a swampy mass of plant debris. Over geologic time, peat was buried under sediment and subjected to heat and pressure (a process called coalification), transforming it into coal. The result is a solid, carbon-rich rock. Coal ranks are classified by carbon content, hardness, and energy density. The four main types are:

  • Anthracite (hard coal): The highest rank, very hard and shiny, with the highest fixed carbon content. Anthracite burns the hottest and cleanest of all coals, but it is relatively rare.
  • Bituminous: A mid-rank coal with high heating value, often used for electricity and steelmaking. It is the most common coal type mined worldwide.
  • Subbituminous: Lower rank than bituminous. It is mostly dull and black, with moderate heat value, used mainly in power plants.
  • Lignite (brown coal): The lowest rank, brownish-black and high in moisture. Lignite has low heat content and is generally burned near mines for local electricity.

Each rank differs in carbon and impurity content: anthracite has the most carbon (often >85–90%) and least moisture, while lignite has a lot of water and much less carbon. As rank increases, coal becomes harder and energy-dense. (For example, anthracite may contain >90% carbon by weight, whereas lignite may be ~25–35% carbon.) This classification matters because it influences how and where each type is used.

Mining Coal

Coal is extracted by two main methods: surface mining and underground mining. Globally, these methods contribute roughly equally to production. The choice depends on geology: when coal seams lie near the surface, surface (open-pit) mining is used; deeper seams require underground mining.

  • Surface mining (area strip, open-pit, mountaintop removal, etc.) involves clearing vegetation and topsoil, then removing the overlying rock (“overburden”) with heavy machinery or explosives. Once the coal seam is exposed, it is broken up and loaded onto trucks or conveyors. Afterward, the land is reclaimed (topsoil replaced, vegetation restored). This method can remove very large quantities of coal (for example, about two-thirds of U.S. coal now comes from surface mines, since it is generally cheaper than underground work). Common forms include area strip mining (scraping away layers in flat terrain) and mountaintop removal (blasting off mountaintops in Appalachia to access seams).
  • Underground mining (shaft, drift, or slope mining) is used when coal lies far below the surface. Miners dig vertical shafts or adits, then tunnels into the coal seam. Common techniques include room-and-pillar, where coal is mined in a grid of rooms leaving pillars to support the roof, and longwall mining, where entire sections of seam are extracted by machinery as the roof caves in behind. Underground mines release methane gas and require extensive ventilation. Although underground work is more expensive and hazardous, it accesses deep or high-grade deposits (for example, anthracite in eastern U.S. or metallurgical coal in western Canada). Safety and ventilation systems are critical to manage hazards like gas explosions and subsidence.

After extraction, coal often goes to a preparation plant near the mine. There it is cleaned of rock, soil, sulfur and other impurities, raising its energy value. Finally coal is transported to consumers by a combination of rail, barge, ship, truck or conveyor. In fact, about 70% of U.S. coal is delivered by train for at least part of the journey. Mines located near power plants or in river basins may ship via barges or conveyors. Coal transport can be a significant part of cost; thus many coal-fired plants are located near mine sites or ports.

Uses of Coal

Coal’s primary use is generating electricity. In coal-fired power plants, coal is burned to heat water into steam, which drives turbines to generate AC power. Coal still accounts for roughly one-third of global electricity. (For example, in 2024 world coal power generation was about 10,700 TWh, even though its market share has fallen to ~35% – the lowest since the 1970s.)

Beyond electricity, coal is vital for industry. Nearly three-quarters of world steel is made using coal (coke) in blast furnaces. Coal is converted into metallurgical coke, which provides both carbon and heat for smelting iron ore. The steel and cement industries depend on coal: the IEA notes that coal remains “the largest energy source for… steelmaking and cement production”. Cement kilns often burn coal or petcoke to reach high temperatures, contributing to cement output.

Other uses include heating (especially in developing regions where coal may be burned in home stoves or boilers) and industrial fuel (e.g. for brick and glassmaking). Coal byproducts (coal tar, ammonia) are also raw materials in chemicals and synthetic fibers. However, these uses are minor compared to power and steel.

In summary, the major uses of coal include:

  • Electricity generation: Still ~70% of global coal demand.
  • Steel production: Coal used as coke in metallurgical processes.
  • Cement manufacture: Coal fuels kilns for cement and lime.
  • Industrial heat: Boilers and furnaces in various industries.
  • Other: Domestic heating, chemicals (coal gasification or liquefaction processes).

By contrast, coal’s role in heating buildings and trains has largely disappeared, replaced by oil, gas or electricity in most places.

Global Production and Consumption

Coal is mined and consumed worldwide, but production and demand are highly concentrated. China by far leads coal production and use. Other major producers include India, the United States, Australia, Indonesia and Russia. In 2021 statistics (see chart below), China produced roughly three times as much coal as India or the U.S. combined. Australia and Indonesia rank as the next largest producers, largely because they export coal to Asia.

 Major coal producers (annual output, recent data): China (world leader), India, United States, Australia, Indonesia, Russia (see source).

On the consumption side, China also dominates. China uses about 40% more coal than the rest of the world combined. Its share of global coal consumption is around 58%. China’s coal demand surged for decades to power its growth, but recent efforts to diversify (more renewables and gas) have slowed consumption growth after 2013. India is the second-largest consumer; its demand has continued to grow (over 5% in 2024, reaching new highs), driven by expanding electricity and industry, though its total use is still well below China’s.

Other major consumers include the United States, Japan, South Korea, and European countries. Notably, coal use in the US and EU has declined: between 2009 and 2019 the U.S. share of electricity from coal fell from 45% to 24%, and Europe’s coal share fell from 31% to 15%. In fact, by 2024 U.S. coal-fired generation reached a 60-year low. Today (2025) about two-thirds of U.S. coal production still fuels power plants, but overall output is far below its 2008 peak (over 1,100 million short tons then vs. ~500–600 now). Similarly, Germany, Poland and other European nations have phased out many coal plants. In contrast, China and India continue building new coal capacity, so Asia has become the center of coal demand.

Several countries have large coal reserves: for example, the U.S. has an estimated 252 billion tons of recoverable coal (the world’s largest reserves). Australia, Russia, India, and China also have vast reserves. Export-oriented producers like Australia, Indonesia and Russia ship coal overseas (especially to Asian buyers), while large consumers like China and India mostly burn domestic coal.

Environmental and Health Impacts

Coal has significant environmental and health consequences. Most critically, burning coal releases enormous carbon dioxide (CO₂). Coal combustion (especially in power plants) is the single largest anthropogenic source of CO₂. In recent years coal CO₂ emissions reached historic highs (e.g., ~15–16 billion tonnes per year), contributing roughly 40% of global energy-related CO₂. Because of its climate impact, phasing out coal is seen as essential to meet international climate goals.

In addition to CO₂, coal burning produces a host of air pollutants and toxins. For example, coal plants emit large quantities of sulfur dioxide (SO₂) and nitrogen oxides (NOₓ), which cause acid rain and smog. They also release particulate matter that can cause respiratory and cardiovascular diseases. Mercury and other heavy metals in coal become airborne: in the U.S., coal-fired power plants account for about 42% of mercury emissions (as well as significant shares of arsenic, selenium and lead). These pollutants are linked to asthma, cancer, heart and lung ailments, neurological problems, and environmental damage like acidification. In short, air pollution from coal combustion is associated with severe health and ecological harm.

Coal mining itself also has environmental risks. Mining can destroy landscapes and habitats (especially surface mining and mountaintop removal), pollute groundwater with runoff, and cause soil erosion. Underground mining releases methane (CH₄), a potent greenhouse gas. Methane from coal mines is a significant climate concern: globally, coal mining emits roughly one-third of the methane released by fossil fuel activities (or about 12% of all human methane emissions). In the U.S. alone, coal mines accounted for ~8% of national methane emissions in 2019. Finally, coal ash (the residual waste from burning) contains toxic elements that can contaminate water if not properly stored.

The environmental cost of coal extends to the climate: because coal emits about twice the CO₂ of natural gas per unit of energy, its continued use is incompatible with deep emissions cuts. In fact, the IEA notes that coal-fired power is currently the largest single source of global CO₂. Thus reducing coal consumption is seen as a top climate policy priority.

Key pollutants from coal:

  • Carbon dioxide (CO₂) – by far the largest source from energy, driving climate change.
  • Sulfur dioxide, NOₓ, particulates – causing acid rain, smog, respiratory diseases.
  • Mercury and heavy metals – coal plants emit the majority of air-borne mercury (and high fractions of arsenic, lead, etc.).
  • Methane – coal mining vents CH₄ (a potent greenhouse gas) to the atmosphere.

Economic and Social Aspects

The coal industry has significant economic and social dimensions. It provides energy security, tax revenues and jobs, especially in regions where coal mining is a livelihood. At its height, coal mining employed millions worldwide. However, productivity gains have sharply cut labor needs: modern machinery and large open-pit mines allow far fewer miners to produce the same output. For example, in the United States coal output doubled in six decades while employment dropped by over 80%. (Today U.S. coal mines produce roughly three times more coal per worker-hour than in 1978.)

Regional economies can be heavily dependent on coal. Coal mining communities (in Appalachia, Poland’s Silesia, West Virginia, etc.) often face boom-bust cycles: a mine closing can devastate a town. Political pressure to protect these jobs has kept coal in the national spotlight. For instance, some political leaders have vowed to revive coal jobs by easing regulations. But many coal regions are gradually diversifying or seeing population decline as alternative industries (like natural gas or renewables) grow.

Coal companies have also struggled financially. After decades of profitability, many large coal mining firms have seen losses or bankruptcies as markets shifted. In the last decade, global coal producers consolidated: major miners reduced coal exposure, while Chinese state companies grew larger. The four largest coal producers today are three big Chinese state-owned firms and India’s Coal India (among hundreds of mines worldwide).

From a social perspective, coal has high human costs. Coal miners historically face occupational hazards: mine accidents (collapses, explosions) and black lung disease (from coal dust) are ongoing issues. Environmental justice concerns also arise when coal plants disproportionately affect nearby communities (often poor or marginalized groups) through air and water pollution.

Economically, coal has been relatively cheap on the market, but its external costs (health damage, climate change) are enormous. Societies increasingly question these hidden costs. In many countries, public opinion and investor pressure now favor cleaner energy. As a result, financing for new coal projects has become harder to secure, reflecting a shift in how coal’s full costs are accounted for.

Clean Coal and Technology

Recognizing coal’s environmental impact, various technologies and policies aim to reduce its harm. “Clean coal” generally refers to methods that cut pollution from coal use. These include coal washing (to remove dirt and sulfur), improved pollution controls, and advanced plant designs. For example, modern power plants use electrostatic precipitators and fabric filters to remove >99% of fly ash, and flue-gas scrubbers to cut most sulfur emissions. Newer plants also operate at higher efficiency (supercritical boilers), so they emit less CO₂ per kWh than old plants.

Perhaps the most discussed concept is carbon capture and storage (CCS). This involves capturing CO₂ from the plant’s exhaust and injecting it underground. In theory, CCS could allow coal plants to run with much lower greenhouse emissions. However, in practice CCS is still very costly and energy-intensive. Estimates suggest capturing and storing coal’s CO₂ would reduce net efficiency by ~20–30%. Deployment has been slow: only a few pilot projects exist worldwide. The IEA notes that without massive new commitments, CCS will remain a niche solution – far from “plug-and-play”.

Another path is coal gasification and coal liquefaction, which convert coal into cleaner-burning gas or liquid fuels. These can achieve higher thermal efficiency and produce fewer pollutants. But like CCS, such technologies are complex and expensive. In short, while technologies can mitigate some coal pollution, they often come at a high price. As one expert commentary puts it, developing “clean coal” that truly has near-zero emissions remains a huge challenge, requiring substantial cost and energy.

Key “clean coal” measures include: advanced emission controls (FGD scrubbers, low-NOx burners), higher-efficiency plant designs, coal washing, and (potentially) carbon capture. Each helps cut pollutants, but none eliminate the fundamental carbon footprint.

Challenges and Policies

Coal’s future is shaped by economics, politics and climate policy. In many countries, coal faces strong headwinds: abundant low-cost natural gas (thanks to fracking) has made gas-fired power cheaper than coal in places like the US. Renewables (wind, solar) have grown exponentially: technological improvements and subsidies have dramatically lowered their cost. Climate policies add pressure too: after the 2015 Paris Agreement, many governments pledged to cut coal use to meet CO₂ targets. Coal plants now often face carbon taxes or emissions regulations, raising their operating costs.

As a result, analysts say a “historic turning point” may be near. The IEA projected that under current policies coal demand would peak by the end of this decade. Major economies have announced coal phase-out plans (e.g. the UK by 2024, Germany by 2030s, and China has a target to peak CO₂ emissions by 2030). Even so, large uncertainties remain. Developing nations (India, Indonesia, Africa) still build new coal plants to meet energy needs. In fact, Asia now accounts for about two-thirds of global coal consumption and plans many more plants.

Economically, coal projects are often bankrolled by state-owned utilities or development banks, since private investors are wary. The interplay of energy demand growth versus climate goals makes coal a highly contested issue.

The Future of Coal

Looking ahead, the consensus is that coal’s role will gradually decline, though not vanish overnight. On one hand, emissions concerns and alternative energy sources push down coal’s market share. As noted, global demand likely peaked around 2013, and most models see steady declines in coming years. On the other hand, coal is still plentiful and cheap, and many developing countries remain reluctant to curb it without affordable alternatives.

In the near term, coal may continue providing baseload power and industrial heat, but more of it may be used in the highest-efficiency plants or with partial carbon capture. Long term, if the world meets aggressive climate goals, unabated coal is expected to play only a supporting role or be phased out entirely. Whether coal’s decline accelerates will depend on technology (costs of gas, renewables, storage, CCS) and policy (carbon pricing, regulations).

In summary, the coal industry today is in transition. It remains a critical energy source for electricity, steel, and cement, but faces steep environmental costs. The coming decades will likely see coal’s share of global energy shrink as the world shifts toward lower-carbon alternatives. Understanding the coal industry thus requires balancing its historic importance and current challenges against the urgent need for cleaner energy.