A novel and environmentally benign binary supercritical fluid system, comprised of supercntical CO2 and ethanol (SCCO2-ethanol), was employed to convert coal, a conventional energy resource, into high-value liquid tar which can be used as feedstock for the production of fuels/chemicals and carbon fibers. The SCCO2-ethanol system shows good performance for producing valuable liquid tar in high yield from Powder River Basin sub-bituminous coal. The results show that the highest yield of liquid tar reaches up to approximate 38 wt% (38 g/ 100 g raw coal) at 350 degrees C, and that SCCO2 can promote the liquid tar yield by 5.6 wt% compared to that using pure ethanol due to the synergistic effect between ethanol and SCCO2. The liquid tars are better candidates as clean fuels than the raw coal or even bituminous coal due to their higher heating values and almost free from ash. The liquid tars from degradation in SCCO2-ethanol (liquid tar(SCCO2-ethanol)) and in ethanol without SCCO2 (liquid tar(ethanol)) at 350 degrees C were characterized with multiple analytical techniques. Fourier transform infrared analyses indicated that both liquid tars have similar distributions of functional groups. The proportion of volatile and small-molecular species in liquid tar(SCCO2)-(ethanol) is higher than liquid tar(ethanol) according to thermogravimetric analysis. Further, gas chromatograph/mass spectrometry analyses show that phenols and aliphatic esters are the dominant volatile compounds in both liquid tars. The H-1 and C-13 nuclear magnetic resonance analyses reveal that both liquid tars have low aromaticity and liquid tar(S)CCO2-(ethanol) contains more aromatic carbons than liquid tar(ethanol,) especially highly condensed aromatic carbons. Methylene and aliphatic and aromatic CH3 are the major aliphatic moieties in both liquid tars. The liquid tars can be separated into light oil and asphaltene fractions by extraction with n-heptane. In addition, the asphaltene fraction has potential to be used as the precursor for fabricating carbon nanofibers via electrospinning. Possible mechanisms for releasing volatile compounds and asphaltene from Powder River Basin sub-bituminous coal by SCCO2-ethanol degradation were also discussed.