Wet carbonization is a thermochemical process for beneficiating low-rank coals by heating the coal in the presence of water to temperatures in the range of 400/sup 0/ to 650/sup 0/F. Wet carbonization produces a low-rank coal product with a higher heating value, lower equilibrium moisture content, lower sodium content, and better handling properties than the raw coal. The low moisture and high heating value of the fuel reduces transportation and handling costs. It also improves the economics of several gasification systems. In addition, combustion efficiencies are also improved, which makes them competitive with desulfurized high-rank coals. The reduction of sodium content in the low-rank coal will also reduce fouling and slagging problems in boilers. The results show that wet carbonization of lump-size low-rank coals is an effective process for significantly reducing the equilibrium moisture content (down to 11%) and sodium contents (by 80%), while increasing the calorific value of the wet-carbonized coal by as much as 16%. Laboratory-scale tests were conducted to determine the effectiveness of using anaerobic digestion for reducing the chemical and biological oxygen demand of the product water and for energy recovery in the form of by-product methane. The results of the anaerobic digestion experiments show that the product water is effectively treated in a two-stage system with a chemical oxygen demand (COD) reduction of 74% and a biological oxygen demand (BOD) reduction of 97%. About 99% of the heavy organics (2 to 3 ring chemical compounds) are degraded during anaerobic digestion. The results from the activated sludge treatment show that further reduction in the COD and BOD to approximately 80% to 100%, respectively, is possible. 11 refs., 80 figs., 55 tabs.