Cool water gas is obtained from carbonaceous material in a 2-stage process--a reduction stage and an oxidation stage. The raw material of 10- to 50-mesh size is mixed with an inert heat carrier, such as 10- to 100-mesh sand, and fed to the reduction stage. The material then passes from the reduction stage to the oxidation or C cleanup stage where all the air required for the production of the ultimate gas is supplied. Off gas from the oxidation stage is fed to the reduction stage. The heat carrier allows use of preheated air in the oxidation zone without any loss in capacity. The heated carrier is then conveyed to the reduction zone where it supplies heat for the endothermic reactions. 1 literature ref., 1 foreign patent and 9 United States patents cited.