The war in Afghanistan has again focused attention on the enormous appetite of the United States for foreign oil. Although the US is home to only five percent of the world’s population, it consumes 25 percent of the world’s oil, most of it in the form of gasoline.

That makes the country very vulnerable. Oil producing nations have pledged not to use oil as a political weapon, but if they changed their minds, they would have enormous power over the US.

Perhaps partially in response to that knowledge, the US Government has dropped its support for a massive project, first undertaken jointly with the automobile industry in 1993, whose aim was to develop affordable cars capable of getting 80 miles to the gallon.

Instead, the Government is giving its support to the development of a promising, but, until now, slow-growing technology - hydrogen-based fuel cells — to power the cars of the future.

This move promises to have a profound effect, not only on US oil consumption, but also on the world’s environment and on the lives of people everywhere.

The US Department of Energy suggests that if ten percent of automobiles in the US were powered by fuel cells, oil imports would be cut by 800,000 barrels a day, about 13 percent of total imports. It would also cut regulated air pollutants by a million tons a year, and the production of 60 million tons of the greenhouse gas carbon dioxide would be eliminated. The automobile industry has embraced this aim wholeheartedly. Daimler-Chrysler hopes to have the first fuel cell vehicle on the market in two years time.

Everyone seems agreed that fuel cells are not going to be just another niche technology, like solar power. “If this works, this is the holy grail,” according to Rick Wagoner, president and CEO of General Motors.

And the managing director of Honda’s Research and Development Department, Takeo Fukui, predicts that the number of fuel cell vehicles will increase swiftly to the point of overtaking the number of gasoline-powered vehicles in the next 20 years to 30 years.

Estimates of the speed and extent of fuel cell penetration of the market vary widely, but predictions that full cell cars will represent 7.5 percent of the new car market in the US by 2010 are quite common.

What makes this notion particularly exciting is that fuel cell technology is capable of being used in a very wide variety of applications. It is already in use in buses, boats, trains, planes, even vending machines and vacuum cleaners. Power generated by fuel cells is being used by hospitals, nursing homes, hotels, office buildings, schools and power plants.

At the moment, market penetration is fairly small, because the cost of the technology is high — anything between $2,000 and $4,500 per kilowatt, depending on the type of application. The intense research being done in the car industry, however, is likely to have a dramatic impact on cost of the technology generally.

Arthur D Little, Inc., who describe themselves as “the world’s premier consulting firm working at the interface of business and the diverse technologies that drive innovation and growth”, predict that when fuel cell costs drop below $1,500 per kilowatt, the technology will become economically competitive, achieving the breakthrough that Mr Wagoner describes as “the holy grail”. Many of the companies in the business are predicting they will reach that kind of economic viability by 2005, and that they will be able to drive costs much farther down fairly quickly thereafter.

Here in Bermuda, the Ministry of Transport and environmentalists will no doubt welcome the new technology. Fuel cells might also have a particular benefit for Belco. Belco’s spokesman Linda Smith told me the company had been watching progress being made in the field for some years. At the moment, she said, generating power with hydrogen-based technology was more than twice as expensive as their oil-based system, and had higher running costs. But from an environmental standpoint, the company felt the technology had promise — especially because of its lower emissions and noise and vibration-free operation. It might also allow the company to distribute power generation away from Belco’s City of Hamilton plant without the kind of expense and Planning problems that oil-powered generators attract.

Belco is the major sponsor of testing being done currently with Government’s Ministry of Transport on a variety of electrical cars in Bermuda. Nine of them have been imported, either by Belco or by private individuals, and are currently being used on the roads. A report on the viability of these cars in the Bermuda market is due out in about two months. But fuel cell technology may well doom electric cars, despite all the work that has been done to bring down their once considerable cost. It promises to be cheaper, more efficient, more convenient, environmentally more friendly and just as quiet.

The technology involved in fuel cells has been around for a while, having been discovered by a Welsh amateur scientist in the 19th Century. It was given a boost in the 1960s when NASA used fuel cell technology in the space programme to provide power for the Gemini and Apollo missions. NASA has been hard at work using and developing the technology ever since, and has helped produce a number of innovative new designs.

A few days ago, for example, they announced the development of a portable energy source that they claim “may someday give that hot pink, shades-wearing, drum-beating bunny a run for its money”.

Their device is tiny — the size of a couple of paperback books — and is capable of running small devices like cell phones or laptop computers for ten hours at a stretch. It is instantly rechargeable by replenishing its methanol fuel. That device was developed with a company called TechSys, Inc, of Florham Park, NJ.

With another company, ElectroChem, Inc, of Woburn, Massachusetts, NASA has developed larger portable systems, at least one of which is available commercially. The EC-PowerPak200, a fan-cooled 200-watt power system, is ideal for running an assortment of small appliances, rather like the kind of small gasoline-powered generator many householders in Bermuda keep on hand in case of hurricane power outages. It is still a relatively expensive device, but prices are falling.

There are a variety of types of fuel cell. The process, though, is the same for all of them. The cell comprises an electrolyte sandwiched between two electrodes, or charged metal plates. An electrochemical reaction between the hydrogen that is used as fuel and oxygen in the air produces electrical energy, water and heat. The cell’s waste product is water vapour, which can be used again in the system when broken down into its constituents, hydrogen and oxygen. Fuel cell systems that use a “fuel reformer” can use the hydrogen from any hydrocarbon fuel, from natural gas to methanol — even gasoline itself. Since the reliance is on chemistry, not combustion, emissions from this type of system are much smaller than emissions from the very cleanest type of combustion process.

Investors interested in the opportunities being created by this new technology have a wide variety of choices. This should not be taken in any way as a recommendation, but some of the bigger players in the game are 3M, of Minneapolis, Minnesota, which makes membranes for proton exchange membrane fuel cells; Air Products and Chemicals, Inc, of Allentown, Pennsylvania, a company that develops processes to produce hydrogen from natural gas; Avista Laboratories of Spokane, Washington, a company that develops proton-exchange membrane fuel cells for residential applications, and Ballard Generation Systems, of Vancouver, Canada, which manufactures fuel systems and enjoys alliances with, among others, Daimler-Chrysler and Ford.

Note: Last week, as the result of a miscommunication, a resolution condemning Israel for human rights violations in recent military actions in Palestine was attributed in this column to the United Nations High Commission on Refugees. The document was, in fact, produced by the United Nations Commission on Human Rights.

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