most substances, if they react with oxygen (ie 'oxidise') will give off heat. carbon is no exception. Carbon oxidises to carbon dioxide(chemical formula CO2). It can also be partially oxidised to carbon monoxide (ie CO). As you can tell from the chemical formula, it can still take another oxygen before it is fully oxidised.
In theory, there would be far more power obtainable if carbon was used - but it is very difficult to meter carbon into an engine. However, gases are very easy to meter - hence by partially oxidising the carbon fuel in a 'gasifier' to carbon monoxide, it turns the fuel into an easy-to-use (but deadly) gas. This process is wasteful, however, as you will use up a lot of the energy in the gasifier - which is wasted as heat.
carbon dioxide is the fully oxidised form of carbon - ie it cant combine with any further oxygen. Therefore, like any other inert gas, it is a good gas to smother a fire in, as it prevents the fire from accessing oxygen in the surrounding air. It is particularly useful as it compresses to a liquid allowing greater storage density - hence it is used instead of argon or nitrogen
Hope that helps
regards