A novel multi-functional energy system with two kinds of fuels (coal and natural gas) and two kinds of products (hydrogen and electricity) is proposed. The proposed system takes advantage of the complementary properties of coal and natural gas by integrating natural gas/steam reforming together with the combustion of coal. Coal is indirectly gasified by combustion so that the need for an air separation unit is eliminated. At the same time, a part of superior natural gas fuel, which is burnt in the reformer, is replaced with inferior coal fuel. Hence, energy utilization is improved effectively. In addition, the novel system is investigated by means of the EUD (energy-utilization diagram) methodology and then compared with the reference system, which is composed of four conventional systems. As a result, the thermal efficiency of the new system may be expected to reach 75%. Moreover, a comparison with the reference system shows that the proposed system provides a 10% energy savings. The promising result obtained here provides an attractive option for an effective utilization of coal and natural gas. (C) 2007 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights reserved.