If the air is less than required
• part of the Coal will not burn and goes out through the ash as un-burnt coal particles. This is equivalent to losing a part of the potential energy of the coal. This is known as Unburnt Carbon Loss.
• in the normal combustion reaction Carbon and Oxygen combine to form Carbon dioxide giving out heat. Actually this takes place in two stages , first is the formation of Carbon monoxide and then the Carbon monoxide reacts to form Carbon-dioxide. If the air is less the second stage does not take place, and Carbon monoxide is formed. This means a part of the potential energy of the coal is not released. This is an energy loss.
Also Carbon monoxide is a toxic pollutant.