It's The N-Generation

When a U.S. alternative energy company signed a technology license contract last month to enable China's largest coal company to build a $2 billion plant to liquefy coal in Inner Mongolia it may have been sealing the future of OPEC. If the technology lives up to its promise and can economically transform coal into diesel and gasoline it may tip the geopolitical scales by reducing the dependence on oil of coal-rich countries like China, the U.S. and Germany. At the same time it could significantly decrease pollution blamed for global warming and acid rain.

Many countries don't use imported oil for power generation, but depend on it for transport. That will change if the cost of converting coal directly into liquid fuels can compete with that of refining crude oil. Nanotechnology may be the long-awaited breakthrough. "It has improved the economics of the process by $5 to $10 a barrel," says Theo Lee, CEO of Hydrocarbon Technologies Incorporated, a subsidiary of Headwaters, a Draper, Utah-based alternative-energy company. "Direct coal liquefaction is now economically attractive in China at today's international crude-oil price [of about $28]; a $4 to $8 a barrel increase in the price would make it economically attractive in the U.S."

Nanos for Novices Picture a millimeter-sized pinhead — a nanometer is one-millionth of that. Down at this scale, different laws of physics come into play. When particles get small enough to be nanoparticles, their mechanical properties change. Thanks to recent advances, industry is better able to take advantage of this. Adding nanoparticles to materials used to build, say, car bumpers or airplane bodies increases strength and reduces weight. It also improves resistance to heat and chemicals. When used with fossil fuels, nanoparticles can unleash the power of nearly all the atoms involved in the catalytic process, cutting costs and increasing efficiency. — J.L.S.

This breakthrough is but one example of the ripple effects that nanotechnology is expected to have on industry, says Tim Harper, founder of the European NanoBusiness Association and of Madrid-based CMP Cientifica, which does research on the business applications of nanotechnology. The technology is already starting to change energy generation and distribution, computer memory and storage, and the aerospace, automotive, textile and pharmaceutical industries.

"The 1990s was all about E-everything, the next decade will be all about N-everything," says an official at the European Commission, which has set aside ?1.3 billion for research into nanotechnology, new materials and production processes.

IBM, Motorola, Hewlett-Packard, Lucent, Hitachi, Mitsubishi, NEC, Corning, Dow Chemical and 3M have either launched nanotech initiatives through their own venture-capital funds or as a result of their own R and D, according to a CMP Cientifica report. Oil companies are busy with R and D projects of their own, says Nathan Tinker, a cofounder of the U.S.'s NanoBusiness Alliance.

The oil industry, already applying nanotechnology to refining petrochemicals, is looking at how it will be used to produce alternative energy. For example, nanotechnology is starting to make solar-energy cells cheaper and more efficient. The next challenge is to figure out how to store the electricity produced for later use. Nanotechnology promises to help by getting batteries to charge faster and making cells more commerically viable. To this end, Samsung, Sony and NEC have separately announced that they will use nanotechnology to make more efficient fuel cells to power laptops and mobile phones. These could be 20% more efficient and have a 10 times better power-to-weight ratio than lithium-ion batteries. The first products may be on the market by Christmas.

Later, cost-efficient fuel cells, running on hydrogen or a hydrocarbon such as methane, could transform both energy production and distribution. Many countries already have natural gas-delivery networks, and cost-effective fuel cells produced with the help of nanotechnology might shift demand from electricity grids. Fuel cells might eventually power cars. If the economics work out, we might even see cars parked in garages providing energy to houses.

If the pundits are right, the impact of nanotechnology on the energy sector will be nothing less than, well, electric.