Mongolia is rich in coal reserves. Coal is the main energy source — and the country's potential reserves are sufficient enough to be used in long-term. Though efficiency of steam boilers of the Combined Heat and Power (CHP) is relatively normal, the technology itself does not meet up-to-date efficiency requirements. Hot water boilers for heating and ger stoves use more than 40 percent of overall coal consumption and their efficiency is very low. In this paper, we discussed two major issues: (1) reserves, geographical distribution and properties of Mongolian coal and (2) expected benefits from introduction of advanced technologies of high-capacity coal combustion. In addition, we considered options to use coal in economically and ecology friendly manner.