China’s coal market, like other commodity markets, is going through tumultuous times.

Prices have plunged in recent months, falling as low as $87 per ton, a steep drop from the $145 price level hit in June. The downward pressure on coal prices will likely continue as stockpiles at ports and power plants continue to grow due to the country’s slowing economy.

The price gyrations have led China's top economic planning agency, the National Development and Reform Commission to remove the price controls it imposed on coal in June. The agency will allow buyers and sellers to negotiate prices based on market supply and demand next year. But the agency also made it clear that it will intervene if it decides that prices are fluctuating too much. The agency imposed price controls last summer when coal prices were soaring and power shortages were common. Today, coal prices are plunging and power demand is falling as China’s export-oriented economy begins to feel the full effect of the global recession.

China obtains about 70 percent of its primary energy from coal. For comparison, the US and the rest of the world draw slightly over 20 percent of their energy from coal. China’s heavy reliance on coal has resulted in staggering air pollution problems.

In an effort to address some of those problems, the Chinese are teaming with a US company to pursue the development of cleaner coal technologies. On December 2, Florida-based Clean Coal Technologies Inc. (CCTI) and the Sino-Mongolia International Railroad Systems Company announced a deal that calls for the construction of a 1.5 million ton per year project to be built in Inner Mongolia that will use the American company’s patented technology. CCTI claims that its process, which involves heating the coal to about 1,100 degrees Fahrenheit, allows it to strip out certain pollutants.

Beyond that, little is known about CCTI. The company has a thinly traded equity on the pink sheets and it reveals very little about how its technology actually works. Nor does its web site make clear which pollutants are stripped out of the coal during its treatment process. A search of Security and Exchange Commission filings returned no information on the company. Press releases from CCTI claim that the first phase of the project, a $250-million plant, will be capable of delivering 1.5 million tons of treated coal per year by 2010. Plans also call for a coal liquefaction facility and a thermal power plant.

While that may happen, it’s worth remembering just how big China’s coal industry is. In 2007, the country produced 2.5 billion tons of coal. That’s about 2.5 times as much coal as was produced in the U.S., and more than 2 times the amount produced by all of the countries of Europe combined.

Thus, don’t count on CCTI – or any other coal technology provider – to make a big dent in China’s coal-related pollution problems any time soon. China is going to be using a lot of coal for a long time to come.