Many believe that renewable energy sources such as wind and solar power will replace fossil fuels, as rising prices and environmental concerns push utilities toward clean energy. The environmental case against coal is valid. Regardless of one’s position in the debate over global warming, numerous studies have shown that coal emissions are detrimental to human health. But alternative energy sources remain too expensive and unreliable to supplant fossil fuels for the time being. Solar installations and windmills both require huge and prohibitively costly battery arrays to be feasible.

Those technologies are impractical for emerging-market nations such as China and India that require cheap electricity to sustain rapid economic growth. Those countries won’t sacrifice their participation in global commerce in the name of environmentalism.

China is in the fortunate position of having abundant coal reserves. But these ample domestic supplies don’t meet China’s demand for coal, which ran in excess of 3 billion tons last year. China is one of the world’s largest importers of the fossil fuel and is forecast to import more than 180 million metric tons this year. This demand bolsters an already massive coal mining industry in Australia.

But coal’s role in electricity generation is only one part of the story.

Metallurgical coal, a higher quality fuel, is necessary for steel production. Global steel production is expected to rise by more than 6 percent in 2011, which will require almost 670 million tons of metallurgical coal. This, in turn, supplies the raw materials for the automotive and construction industries. Although the steel industry has experienced flat growth during the past few years, demand for steel is on the rise as global industrial activity picks up amid an economic recovery.

Market Vectors Coal ETF (NYSE: KOL) is the best option for exchange-traded fund (ETF) investors seeking exposure to the global coal market. Rather than building its coal exposure through futures positions, Market Vectors Coal ETF invests in companies that derive at least half of their revenue from the coal industry. The fund’s holdings cover all aspects of the coal industry, from miners to equipment manufacturers.

The ETF is also geographically diversified, though Asia looms large in the fund’s performance. A little more than half of the fund’s assets are devoted to US-based companies, a play on rising US coal demand and growing exports to Europe. Much of the fund’s remaining assets are linked to Chinese coal demand. About 17 percent of assets are allocated directly to the mainland, while 11.3 percent of assets are allocated to Indonesia and Australia accounts for 9.2 percent of investable assets. China is the primary consumer of Indonesian and Australian coal.

Market Vectors Coal ETF, the newest addition to our Growth Portfolio, rates a buy under 52.