Earth Inc.: How Soon Fuel Cells?

Scientists have tinkered with them for longer than Strom Thurmond has paced the Senate floor. They can mitigate the uncertainties of oil prices on one hand and the threat of climate change on the other. They will be clean and quiet and cheap and won't take up much space in the backyard or basement or wherever you care to put a refrigerator-size box that isn't a refrigerator but can keep one cold. They will bring light to America's moonlit homesteads, pollutionless cars to its highways and stealth weed whackers to its suburbs. They are hydrogen-powered fuel cells, coming soon to an industry near you.

At least that's the hope of investors who have lobbed the first of potentially billions of dollars at a simple chemical principle that an obscure British scientist named William Grove discovered in 1839: when hydrogen and oxygen molecules combine to form water, heat and electricity are produced. Tapping that energy, by binding individual cells into what is known as a "stack," could mean efficient, continuous and clean electricity for everything from long-lasting cell-phone batteries to industrial power generators. And although fuel cells have generated buzz at least since astronauts took a prototype into space on Gemini 5 in 1965, it is only in recent years that a technology suitable for commercially viable hydrogen power has emerged: proton-exchange membrane fuel cells.

"That's one of the misconceptions of this business," says Paul Lancaster, vice president for finance at Ballard Power Systems in Vancouver, Canada. "They've had a phenomenally rapid development. People overpromised them" before a consumer-compatible technology emerged. Ballard (2000 revenues: $41 million), partly owned by Daimler-Chrysler and Ford, is the leader in automotive fuel-cell development.

The technology works, but now the race is on to develop products and bring down costs to levels competitive with all things fossil fuel. "We're trying to do in a 10-year period what it took the internal-combustion engine 100 years to do," says Byron McCormick, director of General Motors' Global Alternative Propulsion Center. For GM and the other leading car manufacturers, it will take investments of hundreds of millions of dollars each to introduce mass-market hydrogen cars by 2010. The target: reduce costs of a fuel-cell engine to $50 per kW for a 70-to-80-kW engine, or about $3,500, the average cost of an internal-combustion engine. (GM's early prototypes stand at 10 times that per kW target.) Toyota Motors will reportedly roll out a fuel-cell car "on a limited basis" in Japan by 2003. No word yet on the cost.