This is the first annual technical progress report for The Advanced Coal-Fueled Gas Turbine Systems Program. Two semi-annual technical progress reports were previously issued. This program was initially by the Department of Energy as an R D effort to establish the technology base for the commercial application of direct coal-fired gas turbines. The combustion system under consideration incorporates a modular three-stage slagging combustor concept. Fuel-rich conditions inhibit NO/sub x/ formation from fuel nitrogen in the first stage; coal ash and sulfur is subsequently removed from the combustion gases by an impact separator in the second stage. Final oxidation of the fuel-rich gases and dilution to achieve the desired turbine inlet conditions are accomplished in the third stage. 27 figs., 15 tabs.