Coal is a fossil fuel formed in ecosystems where plant remains were preserved by water and mud from oxidization and biodegradation, thus sequestering atmospheric carbon. Coal is a readily combustible black or brownish-black rock. It is composed primarily of carbon and hydrogen along with small quantities of other elements, notably sulfur. Coal is extracted from the ground by coal mining, either underground mining or surface mining.
Coal is the largest source of fuel for the Generation of Electricity world-wide .Coal is slightly ahead of petroleum and about double than natural gas.

As geological processes apply pressure to dead biotic matter over time, under suitable conditions it is transformed successively into

Peat, considered being precursor of coal.

Lignite, also referred to as brown coal, is the lowest rank of coal and used almost exclusively as fuel for electric power generation.

Sub-bituminous coal, whose properties range from those of lignite to those of bituminous coal and are used primarily as fuel for steam-electric power generation.

Bituminous coal, a dense mineral, black and sometimes dark brown, often with well-defined bands of bright and dull material, used primarily as fuel in steam-electric power generation, with substantial quantities.

Anthracite, the highest rank; a harder, glossy black coal used primarily for residential and commercial space heating. It may be divided further in to metamorphic ally altered bituminous coal and petrified oil, as from the deposits in Pennsylvania.

Graphite, technically the highest rank, but difficult to ignite and is not so commonly used as fuel: it is mostly used in pencils and, when powdered, as a lubricant.
The classification of coal is generally based on the content of volatiles. However, the exact classification varies between countries. According to the German classification, coal is classified as follows.

Liquefaction - Coal-To-Liquids (CTL)

Coals can also be converted into liquid fuels like gasoline or diesel by several different processes. The Fisher-Tropsch process of indirect synthesis of liquid hydrocarbons was used in Germany for many years and is today used by Sasol in South Africa. Coal would be gasified to make syngas (a balanced purified mixture of CO and H2 gas) and the syngas condensed using Fischer-Tropsch catalysts to make light hydrocarbons which are further processed into gasoline and diesel. Syngas can also be converted to methanol, which can be used as a fuel.

Coal liquefaction is one of the highly proven technologies that could potentially limit escalation of oil prices and change the effects of transportation energy shortage that some authors have suggested could occur under peak oil. This is contingent on liquefaction production capacity becoming large enough to satiate the very large and growing demand for petroleum. Estimates of the cost of producing liquid fuels from coal suggest that domestic U.S. production of fuel from coal becomes cost-competitive with oil priced at around 35 USD per barrel, (break-even cost). The current price of oil, as of July 11, 2008, is 145 USD per barrel. This makes coal a viable financial alternative to oil for the time being, although current production is small.

Coal as a traded commodity

The price of coal has gone up from around $30 per short in 2000 to around $123.50 per short ton as of June 25th, 2008. In North America, a Central Appalachian coal futures contract is currently traded on the New York Mercantile Exchange

World coal reserves and Major coal producers

US coal regions

Of the three fossil fuels coal has the most widely distributed reserves; coal is mined in over 100 countries, and on all continents except Antarctica. The largest reserves are found in the USA, Russia, Australia, China, India and South Africa.