Coal gets most of the blame for the rise in carbon emissions throughout the world. While it's true that coal is a much more carbon-intensive fuel, with the right regulations in place the fuel isn't as dirty as it used to be. Just take a look at the following slide from a recent investor presentation from Peabody Energy (NYSE:BTU).

Source: Peabody Energy Investor Presentation (link opens a PDF)

The left hand of that slide shows the dramatic shift the city of Pittsburgh has seen since the 1950s. What was once a dirty city has become a sparkling clean city despite the fact that coal remains vitally important to its economy. In fact, top coal producer CONSOL Energy (NYSE:CNX) still makes its home in the Steel City and coal flows through the city day and night on both barges and trains. Yet despite its dependence on coal Pittsburgh has been ranked as one of the top 10 cleanest cities in the world according to Forbes. Having previously lived in the city, I believe it. This truly is a city that has come a long way from its dirty industrial past.

The reason Pittsburgh has transitioned from the filth of coal dust in the 1950s to one of the world's cleanest cities is found on the graph on the right hand side of that same slide. That chart notes that coal-based power generation in America is up 173% since 1970. But at the same time, regulated emissions per megawatt hour from coal have plunged 89%. Clearly, coal isn't as dirty as it once was as America has really cleaned up its emissions profile.

Peabody Energy and other big coal producers like CONSOL Energy and Arch Coal (OTC:ACIIQ) firmly believe that large coal growth markets like China will begin to follow America's path to lower emissions while still using more coal. Quite honestly, China has no choice. It leads the world in carbon emissions already by a wide margin. Its biggest hope to reduce those emissions is to tap its massive shale-gas reserves, but it still can't figure out how to unlock that natural gas. Now, with a massive urbanization plan and out-of-control carbon emissions, the country's only real choice is to clean up its coal emissions.

Photo credit: Flickr/Thomas sauzedde 

The fact that America was able to cut its coal emissions, while still growing its usage of coal, is why coal producers are so confident in coal's future as the dominant fuel in emerging markets. Peabody Energy sees global coal demand growing by 48% from 2010 to 2030 as emerging markets need a cheap fuel to support growing urban populations. It sees coal as the only affordable fuel at scale that can be used to meet the rising energy needs of these economies. Meanwhile, Arch Coal sees China and India doubling coal imports by next year because neither country can keep up with increasing demand from domestic output.

Investor takeaway
While natural gas took a lot of market share in America's power market over the past few years as companies like CONSOL Energy unlocked its potential through fracking, it's not likely to do the same overseas. Because of that, coal is positioned to become the dominant fuel across the rest of the world in the years ahead. While that has the potential to fuel an even more dramatic rise in carbon emissions, as American cities like Pittsburgh have demonstrated coal doesn't have to be the dirty fuel of yesteryear. That should keep coal producers like Arch Coal, CONSOL Energy and Peabody Energy very busy exporting it in the years ahead.