The Future of Coal Looks Promising


". . .every American consumes approximately 4 tons of coal a year."

Coal, and the exchange traded funds (ETFs) that track this fossil fuel, plays a vital role in our economy and has the potential to continue to do so in the future.

Major Source of Fuel. Of the roughly one billion tons of coal produced by American mines each year, 90% is used for electricity generation and in some way or form, every American consumes approximately 4 tons of coal a year.

Its Reputation Precedes It. "The use of coal does have its downsides. Coal produces more carbon dioxide per unit of energy than any other fuel and has devastated landscapes, wrecked houses through mine subsidence and produced huge culm banks," states Harold Schobert a professor of fuel science at Penn State.

Cleaning Up Its Act. On the flip side, active research and development is being utilized to mitigate these negative effects of coal. One such method that is being used is trapping and sequestering potential pollutants and developing the fuel into a cleaner source. Schobert believes that coal is not going anywhere for a while. He states that coal will continue to be important in base-load electricity generation and can eventually be used for clean liquid transportation fuels.

Focus on Research. The future of the fuel seems to be promising with the proper research and development and will continue to label coal as a vital raw material, whether it is used to produce energy or premium substances, such as carbon composites.

An ETF to keep an eye one is the Market Vectors Coal ETF (KOL), which is down 8.6% over the past month.

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