By Damon van der Linde - Exclusive to Coal Investing News

For thousands of years coal has been used as an important source of energy, including playing a crucial role as a driving force in the Industrial Revolution. Today, coal is the largest source of energy for electricity generation in the world.

Coal provides 27 percent of global primary energy needs and generates 41 percent of the world's electricity. World coal consumption was about 6,743,786,000 tons in 2006 and is expected to increase 48 percent to 9.98 billion tons by 2030, according to the U.S. Energy Information Administration.The World Coal Association predicts that coal reserves should last 116 years following the current consumption trends.

A 2008 estimate lists the top five holders of proven coal reserves as: the United States, Russia, China, Australia and India. Japan, Taiwan, and South Korea are among the five largest importers, along with China and India.

Coal is classified at varying contents of volatiles, which determines the amount and quality of energy it produces. The most commonly mined classifications are sub-bituminous coal, used primarily as fuel for steam-electric power generation, and bituminous coal, also used primarily as fuel in steam-electric power generation, but with substantial quantities also used for heat and power applications in manufacturing as well as the production of coke - an important component of steel fabrication.

Coal has been the subject of numerous environmental concerns, both in its mining and its burning for energy production. Two main environmental concerns associated with the use of coal are pollution, caused by emissions of contaminants such as sulfur dioxide, nitrogen oxides and mercury, which effects human and environmental health, and greenhouse gases emissions which contribute to global warming.

The leaders of the G-20—the world's top industrialized nations—as well as key countries with developing economies, have agreed to phase out their subsidies for fossil fuels, including coal. The agreement plans to ultimately phase out nearly $300 billion US in global subsidies for fossil fuels. The Organization for Economic Cooperation and Development and the International Energy Agency estimate that eliminating fossil fuel subsidies worldwide would cut global greenhouse gas emissions by 10 percent or more by 2050.

In spite of the globally acknowledged harm caused by reliance on fossil fuels, both coal production and consumption is on the rise. Production of hard coal was 5990Mt in 2009, up from 3497Mt in 1990. The five largest coal users - China, USA, India, Japan and South Africa - account for 82 percent of total global coal use.

China, the world's fastest growing major economy, has massive coal reserves, but the country's energy consumption is growing so rapidly that in 2010, it began importing more coal than it exports. China imported nearly 50 million tons of coal in the first half of 2010, up almost 130 percent from a year ago. China has taken over the U.S. as the world's heaviest consumer of coal, and this, combined with an increased global demand has triggered a change in the world market for energy. Currently about 70 percent of China's energy needs are met by coal.

Except for price inflation generated following the energy crisis of 1973, U.S. coal prices were relatively stable from 1973 through 2007. In 2008, coal prices witnessed a spike when Australia - the world's largest overall coal exporter - was hit by floods that forced several producers to shut their mines, causing a huge decline in output. In addition, a power crisis in South Africa resulted in the closing of mines, which further decreased global production. In 2010, floods in Australia once again caused disruptions which drove up coal prices to unusually high levels. Most industry experts agree that with the growing power demands of China and India, the demand and price of coal will likely keep rising steadily, assuming that radical changes are not made to adopt alternative sources of energy.

Introduction to Coal Investing from Coal Investing News