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COAL                                                                                                                                                                                  
COMMODITY RISK SUITE
RISK MAGNITUDE ON THE LYSCALE RISKGRADE: RM11

Definition: Coal is a fossil fuel formed in swamp ecosystems where plant remains were saved by water and mud from oxidization and biodegradation. Coal is a readily combustible black or brownish-black rock. It is a sedimentary rock, but the harder forms, such as anthracite coal, can be regarded as metamorphic rocks because of later exposure to elevated temperature and pressure. It is composed primarily of carbon along with assorted other elements, including sulfur. It is the largest single source of fuel for the generation of electricity world-wide, as well as one of the largest sources of carbon dioxide emissions, which is considered the primary cause of global warming. Coal is extracted from the ground by coal mining, either underground mining or open pit mining (surface mining).
 
Types of coal
As geological processes apply pressure to dead vegetation matter over time, under suitable conditions, it is transformed successively into

Peat, considered to be a precursor of coal. It has industrial importance as a fuel in some countries, for example, Ireland and Finland.
Lignite, also referred to as brown coal, is the lowest rank of coal and used almost exclusively as fuel for steam-electric power generation. Jet is a compact form of lignite that is sometimes polished and has been used as an ornamental stone since the Iron Age.
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 coal, usually black, 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 also used for heat and power applications in manufacturing and to make coke.
Anthracite, the highest rank; a harder, glossy, black coal used primarily for residential and commercial space heating.
Graphite, technically the highest rank, but difficult to ignite and is not so commonly used as fuel.
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:

Early use
Outcrop coal was used in Britain during the Bronze Age (2-3000 years BC), where it has been detected as forming part of the composition of funeral pyres. It was also commonly used in the early period of the Roman occupation. Evidence of trade in coal (dated to about AD200) has been found at the inland port of Heronbridge, near Chester, and in the Fenlands of East Anglia, where coal from the Midlands was transported via the Car Dyke for use in drying grain.Coal cinders have been found in the hearths of villas and military forts, particularly in Northumberland, dated to around AD400. In the west of England contemporary writers described the wonder of a permanent brazier of coal on the altar of Minerva at Aquae Sulis (modern day Bath) although in fact easily-accessible surface coal from what is now the Somerset coalfield was in common use in quite lowly dwellings locally.

However, there is no evidence that the product was of great importance in Britain before the High Middle Ages, after about AD1000. Mineral coal came to be referred to as "seacoal," probably because it came to many places in eastern England, including London, by sea. This is accepted as the more likely explanation for the name than that it was found on beaches, having fallen from the exposed coal seams above or washed out of underwater coal seam outcrops. These easily accessible sources had largely become exhausted (or could not meet the growing demand) by the 13th century, when underground mining from shafts or adits was developed.[2] In London there is still a Seacoal Lane (off the north side of Ludgate Hill) where the coal merchants used to conduct their business. An alternative name was "pitcoal," because it came from mines. It was, however, the development of the Industrial Revolution that led to the large-scale use of coal, as the steam engine took over from the water wheel.
 
Coal as fuel

Coal is primarily used as a solid fuel to produce electricity and heat through combustion. World coal consumption is about 5.3 billion tons annually, of which about 75% is used for the production of electricity. The region including the People's Republic of China and India uses about 1.7 billion tonnes annually, forecast to exceed 2.7 billion tonnes in 2025.  The USA consumes about 1.0 billion tons of coal each year, using 90% of it for generation of electricity.

When coal is used for electricity generation, it is usually pulverized and then burned in a furnace with a boiler. The furnace heat converts boiler water to steam, which is then used to spin turbines which turn generators and create electricity. The thermodynamic efficiency of this process has been improved over time. "Standard" steam turbines have topped out with some of the most advanced reaching about 35% thermodynamic efficiency for the entire process, which means 65% of the coal energy is rejected as waste heat into the surrounding environment. Old coal power plants, especially "grandfathered" plants, are significantly less efficient and reject higher levels of waste heat. The emergence of the supercritical turbine concept envisions running a boiler at extremely high temperatures and pressures with projected efficiencies of 46%, with further theorized increases in temperature and pressure perhaps resulting in even higher efficiencies[6] Approximately 40% of the world electricity production uses coal. The total known deposits recoverable by current technologies, including highly polluting, low energy content types of coal (i.e., lignite, bituminous), might be sufficient for 300 years' use at current consumption levels, although maximal production could be reached within decades (see World Coal Reserves, below).

A more energy-efficient way of using coal for electricity production would be via solid-oxide fuel cells or molten-carbonate fuel cells (or any oxygen ion transport based fuel cells that do not discriminate between fuels, as long as they consume oxygen), which would be able to get 60%–85% combined efficiency (direct electricity + waste heat steam turbine). Currently these fuel cell technologies can only process gaseous fuels, and they are also sensitive to sulfur poisoning, issues which would first have to be worked out before large scale commercial success is possible with coal. As far as gaseous fuels go, one idea is pulverized coal in a gas carrier, such as nitrogen. Another option is coal gasification with water, which may lower fuel cell voltage by introducing oxygen to the fuel side of the electrolyte, but may also greatly simplify carbon sequestration.

Major coal exporters
Exports of Coal by Country and year (million tonnes)[33] Country 2003 2004
Australia 238.1 247.6
United States 43.0 48.0
South Africa 78.7 74.9
Former Soviet Union 41.0 55.7
Poland 16.4 16.3
Canada 27.7 28.8
People's Republic of China 103.4 95.5
South America 57.8 65.9
Indonesia 107.8 131.4
Total 713.9 764.0