Welsh Coal is a narcotic for Bio-Fused steam locomotives. It leads to addiction and dependency after long use.
History
It is used to give certain engines that aren't powerful enough (Such as Henry) a "Kick" to get them going. It was also used to experiment with high speed steam locomotives (specifically Spencer) to push them to their limits. In the same experiment, it is shown that overdosing can set the Bio-Fused locomotive's face on fire. Welsh Coal is used as an incentive for the last illegally operating Bio-Fused locomotive, Ferdinand, to work. It also led to Gordon listening to the voice in his head and burning down Knapford Station.
During the TV series, the Bio-Fused actors are seen high on Welsh Coal a lot. Eventually they start pulling shenanigans to get the coal, making them seem like "accidents". This was all revealed in Project G-1.