Inide the Fuel Cell Industry- Week of August 31/2003

Texaco Ovonic Hydrogen Systems (TOHS) invited the local media for a preview of a solid hydrogen storage system ICE (internal combustion engine) that functions on hydrogen supplied by low-pressure (1500 psi) hydride storage tanks.

During the event, ECD Ovonics and TOHS demonstrated how they have a solution to the hydrogen fueling infrastructure challenge by developing low-pressure hydrogen storage tanks that can be deployed to the existing gasoline fueling station network. The 2002 Ovonic Hydrogen Prius was test-driven by several of the guests.

Stan Ovshinsky and Robert Stempel of ECD Ovonics, as well as senior scientists from TOHS, talked about the ECD Ovonics' energy generation and storage technologies that work hand-in-hand in a closed loop to bring hydrogen to work for consumers and businesses.

Gene Nemanich, Vice President of Hydrogen Systems and Fuels, ChevronTexaco Technology Ventures, was also among those presenting to the media during the preview.

Dr. Rosa Young, Vice President of Technology, Texaco Ovonic Hydrogen Systems, spoke about the merits of the Ovonic solid hydrogen storage system and how it was integrated into the 2002 Ovonic Hydrogen Prius.

Mr. Blaine Froats, Chairman of Alternate Energy Corporation (OTCBB: ARGY) announced that AEC yesterday successfully completed a hydrogen volume flow test in preparation for running the Astris fuel cell.

Astris requires a certain amount of hydrogen to run its latest fuel cell and AEC has to meet this requirement. AEC has captured
and stored certain volumes of hydrogen from its production that will be tested for purity by an independent laboratory.
Impurities can be removed, if necessary, with a filtering system.

Upon the completion of the purity testing, AEC will supply hydrogen, on demand, to the Astris fuel cell. It is expected that
this could occur within the next two weeks, after which, both the AEC hydrogen production unit and the Astris fuel cell will be
available for demonstration to major interested corporations.

The AEC hydrogen production unit produces hydrogen from water utilizing a chemical formulation that will, when combined with the Astris fuel cell, produce electricity at a greatly reduced cost than that of other existing fuel cell systems.

Energy Visions Inc. ("EVI") (NASD: OTCBB: "EGYV" and TSXV: "EVI.S") announces today that Brethren Venture Corporation ("Brethren") of Mississauga, Ontario, has failed to provide the Cdn. $2,000,000 Loan referred to in its Letter of Commitment announced on June 11, 2003.

Under the terms of such Letter of Commitment, Brethren stated that it was prepared to provide a Cdn. $2.0 Million loan to permit EVI to acquire shares of Pure Energy Inc. ("PEI") and to provide working capital for both PEI and EVI, subject to certain conditions.

Brethren has advised EVI that it is experiencing financial difficulties, has not participated in the preparation of the documents necessary to complete the transaction, and has not responded to repeated EVI enquiries as to the status of the financing, including one final request to confirm by 4:00 p.m. August 25, 2003 that Cdn. $2,000,000 has been deposited in trust with legal counsel pending completion of the transaction within 10 business days.

EVI is still intent upon trying to complete the PEI acquisition transaction but completion is contingent upon EVI's successfully raising the necessary funds. EVI's management will actively seek new funding to replace the Brethren financing.

EVI CEO Wayne Hartford said, "The proposed Brethren financing was primarily intended to allow the acquisition of a majority interest in Pure Energy Inc. I thank all at PEI, Rabih Holdings Ltd. and Nova Scotia Business Inc. for their ceaseless efforts to make the PEI acquisition deal a reality."

In June 2003, Hibar Systems Limited ("Hibar"), the present principal shareholder of PEI acquired the laboratory assets of Battery Technologies Inc. ("BTI") in bankruptcy at a price of Cdn. $135,000. Hibar has verbally indicated that it will permit EVI to occupy space in its premises previously occupied by BTI at a rental of approximately Cdn. $5,000 per month, such sum to include the use of the above laboratory assets. Both EVI and Hibar anticipate that once the PEI acquisition transaction closes, EVI will be granted the right to acquire such BTI laboratory assets in the future, at Hibar's cost, and with detail terms to be negotiated.

At EVI's shareholders meeting held on July 15, 2003, Messrs Ronald K. Braun and Mr. Anthony H. Mehta were elected new members of the Company's Board of Directors.

Smart Fuel Cell (SFC) will start to sell its SFC A25 portable fuel cell unit from September 2003. The company announced today, that it has been working with German caravan manufacturer Hymer which has implemented the unit into its mobile homes. Smart Fuel Cell and Hymer are going to present the product on this years Caravan Salon in Duesseldorf, Germany (30.August- 07.September).
SFC A25

From then on, the fuel cell unit is commercially available to everybody. SFC will sell the unit for Euro 3,990 during the fair and for Euro 4,990 afterwards. The refuelling of the necessary methanol cartridge will cost Euro 14.90.

Smart Fuel Cell aims to conquer the caravan market as well as possible applications in recreational vehicles and sailing boats. In addition, the unit can be used as a remote industrial power source for traffic and telecommunication systems, danger warning and weather stations. The 2.5 litre cartridge will provide enough fuel to power the SFC A25 for 70-80 hours.

Neah Power Systems Inc., an emerging leader in micro fuel cell technology, today announced that it has appointed Dr. Arthur Homa as Vice President, Engineering. Dr. Homa will direct all engineering and R&D activities for the company. "As we advance our silicon fuel cell platform toward system prototypes, our technical organization has to grow accordingly," said Dave Dorheim, CEO at Neah Power Systems. "This is another step towards building a world-class technical organization that enhances our efforts for achieving all-day mobile computing with our micro fuel cell. We're incredibly pleased to have a professional of Art's caliber join the company. He will be working closely with Co-founder and Chief Technology Officer, Leroy Ohlsen, to shape and deliver our technical vision."

Dr. Homa, a General Electric and Rayovac veteran, joins Neah Power Systems from an assignment with Gold Peak Industries, a Singapore-based company that manufactures and distributes consumer batteries worldwide. In this assignment, Dr. Homa established a new manufacturing operation in Singapore. Prior to Gold Peak, Dr. Homa was Senior Vice President, Technology and Manufacturing at Bolder Technologies where he led the development, design and production of a new class of consumer battery products. During his tenure at Bolder Technologies, Dr. Homa was responsible for advancing technology from the laboratory stage to a high-volume, highly automated commercial production capability. Prior to that, he served as Vice President, Technology at Rayovac Corporation, the third largest producer of consumer batteries in the United States, where he had responsibility for the R&D center and all research operations."

I am thrilled to join Neah Power Systems at a time when our potential seems immense," said Dr. Art Homa. "After reviewing the competitive landscape, it was clear to me that Neah Power's unique silicon-based technology has the greatest potential for performance and market success. I look forward to using my experience in developing, building, and shipping products to help the organization fulfill its potential."

Dr. Homa began his career at General Electric, working in the Lighting Business Group and on nickel cadmium battery development. He received his Ph.D. in Electrochemistry from Case Western Reserve University in Cleveland, OH under Professor Ernest Yeager, Chairman of the Case Center of Electrochemical Sciences. Previous to this, he earned his B.A. in Chemistry from Franklin & Marshall College in Lancaster, PA.

According to a news story in the German “Hamburger Abendblatt”, Siemens received an order from ship builder “Kieler Werft HDW” to manufacture a portable 160kW fuel cell to supply power on board of ships. Siemens and HDW are already using the fuel cell technology in submarines. Last year, the companies presented the fuel cell u-boat U31, which is destined for the German Navy.

However, the new fuel cell will not be built into a ship or submarine but will be an independent power unit which could be moved from one vessel to an other to supply clean energy.

A PPL Corporation (NYSE: PPL) subsidiary has completed the installation of a clean, reliable fuel cell energy system for Zoot Enterprises' high-technology campus located eight miles west of Bozeman, Mont.

At a dedication ceremony today at Zoot's campus, PPL's distributed generation and energy services subsidiary said it has completed the development of two 250-kilowatt fuel cell systems, which use natural gas for fuel and produce electric power and hot water for heating and domestic uses.

FuelCell Energy of Danbury, Conn. (Nasdaq: FCEL), manufactured the fuel cells. PPL has an equity investment in FuelCell Energy and is a distributor of its fuel cells in the U.S.

"Until recently, fuel cell energy technology was not available commercially, and its practical use was very limited," said Michael E. Kroboth, president-PPL Energy Services Holdings. "However, fuel cells are now part of a growing range of environmentally friendly energy solutions that PPL is providing to our customers. PPL is proud to supply Zoot's campus with an efficient, reliable on-site fuel cell energy system."

The total value of the Zoot fuel cell project is $3.8 million, with $1.4 million provided in the form of a grant from the United States Department of Energy. U.S. senators Max Baucus and Conrad Burns were active supporters of the project and assisted in securing federal funding.

The campus, which ultimately is expected to include 14 commercial lots, is the site of Zoot's recently completed 155,000-square-foot headquarters building. The headquarters building will house 410 employees at full capacity, including an electronic data processing center that performs the company's core business functions.

Zoot is using the fuel cell power plant system in conjunction with the electric grid to meet the primary electrical requirements of its building and to support future development at the campus.

"We are thrilled with the success of the fuel cell project," said Chris Nelson, president and CEO of Zoot Enterprises. "Fuel cells provide very reliable power, which is vital to our business. More importantly, they have an extremely low impact on the environment -- which is important to us personally. Our partnership with PPL and FuelCell Energy has allowed us to be
part of something that will have a lasting impact."

"Zoot's innovative thinking recognized early on the value of critical power, which led to the installation of these DFC power plants we are dedicating today," said Herbert T. Nock, senior vice president of marketing and sales for FuelCell Energy. "After the recent northeastern U.S. blackout, we expect many other businesses to follow Zoot's example, utilizing our products to assure critical power needs are met while relieving load from a congested grid."

Fuel cells generate electricity with no combustion. They are, in effect, like large, continuously operating batteries that generate electricity as long as a source of hydrogen, such as natural gas, is supplied. Since the natural gas is not burned, pollution commonly associated with the combustion of fossil fuels is dramatically reduced. The technology is similar to that which helps
power NASA's space shuttle.

Demonstrating its commitment to clean power and the environment, PPL has a number of other fuel cell projects in various stages of development with a variety of customers:

* In May, a fuel cell power plant at the U. S. Coast Guard Air Station in
Bourne, Mass., began commercial operation.

    * In early August, a fuel cell power plant at Starwood Hotels and
       Resorts' Sheraton Edison in New Jersey began commercial operation. A
       second plant at another Starwood property in New Jersey will begin
       comercial operation the end of September.

    * Ocean County College in Toms River, N.J., will install a 250-kilowatt
       fuel cell later this year to provide heat and electricity to several
       buildings on the campus.

    * PPL has signed a financial assistance agreement with the Connecticut
       Clean Energy Fund for a fuel cell project at an industrial site in
       Bloomfield, Conn.

    * PPL has received grant approval from the New York State Energy Research
       and Development Authority and is working to develop a fuel cell
       project in the New York metropolitan area.
Zoot Enterprises was founded in 1990 to meet the needs of the financial industry for credit verification and banking software. Zoot's ASP environment now brings its inventive and innovative approach to loan origination systems. The company has partnered with industry leaders to offer an integrated best-of-breed solution. Zoot currently processes credit information for seven of the top 10 credit grantors in the United States.

The hundreds of thousands of subway passengers trapped for hours on the New York City subways during the largest North American blackout earlier this month take note: one day subways could run independent of the electricity grid.

The Denver-based Fuelcell Propulsion Institute plans to convert a 120-ton diesel locomotive into a fuel cell-driven train, a project that could one day make fuel cells a reality for subways.

"Subway systems running on the grid is obviously a precarious proposition," said Arnold Miller, spokesman for the five-year project. "Fuel cell subways would not be dependent on the grid."

During the largest North American blackout earlier this month, some 350,000 people were trapped for up to three hours in the New York City subway system.

Subway officials from New York, Denver and London are providing guidance for the project which is funded by the U.S. Army and the National Automotive Center in Michigan.

"We're just there observing," said a New York Metropolitan Transportation Authority official, who stressed that MTA's participation did not bind its subways in anyway to the technology.

Miller said another participant in the project, Texas-based BNSF Railway company, spends $1 billion a year in diesel costs for its heavy freight rail. He said fuel cells could eventually lower that bill by 20 percent.

Fuel cells combine hydrogen with oxygen in a chemical reaction that produces electrical power emitting only water as a byproduct. Obtaining supplies of hydrogen, however, can take large amounts of energy from fossil fuels. Fuel cell backers hope wind, nuclear and solar energy will help build supplies of hydrogen in the future, enabling the technology to be a clean source of energy.

From August 15 to September 1, 2003, residents of the City of Toronto have the opportunity to take a close look at a fuel cell generator and a fuel cell powered commercial work vehicle. The fuel cell generator, a 50 kW HySTAT developed by Hydrogenics Corporation and the vehicle, a John Deere Pro Gator, will be at the Exhibition grounds for the duration of the 2003 CNE. This is part of the Fuel Cell Demonstration Project, an initiative of the City of Toronto in partnership with Hydrogenics Corporation and Exhibition Place.

During the demonstration, spectators will see a sampling of the John Deere Gator at work and how it can also supply power to lights, fans and other devices.

The fuel cell powered vehicle refuels with hydrogen using the refuelling capabilities of the HySTAT generator.

Throughout the 2003 CNE, visitors have the opportunity to learn more about fuel cell technology and its potential as a future solution for clean energy. The 50kW HySTAT Fuel Cell Stationary Generator/
Hydrogen Refueller will provide peak-shaving electricity to the National Trade Centre building.

The three-year demonstration project is intended to test the potential of fuel cell technology for zero emissions.

The demonstration at the 2003 CNE is only phase one of the project. Phase 2 in 2004 will see the fuel cell generator supply continuous power to the National Trade Centre in order to meet more of its electricity's needs. Finally, Phase 3 will showcase an urban transit bus powered by Hydrogenics' fuel cell technology. Also in this phase, a PEM electrolyser developed by Hydrogenics will produce the hydrogen for the bus from a renewable energy source such as wind.

With a new reliable, cleaner and decentralised Energy Supply based on Hydrogen and Fuel Cells, incidents like the 2003 blackout in US and Canada would not have happened. The "components" to achieve this goal are available; some need additional R & D work, but the target can be achieved.

Cars are the key. There are 44 Mil. cars registered in Germany (82 Mil. Inhabitants) with an average power of 70 kW in their ICE's, producing a total of approximately 3,000 GW, used, at this time, "only" for transportation.

If you then consider that the average car, in Germany, only runs 1 hour out of 24 and imagine that all of these cars would be equipped with a 75 kW Fuel Cell powered by Hydrogen, we would have more than enough "Power" to supply all consumers of electricity in Germany. Other countries are comparable. Hydrogen, the most common element in the universe, can be produced from Renewable Energies to drastically reduce CO2 emissions.

The incentive for car owners driving vehicles equipped with Hydrogen and Fuel Cells systems is that they all can earn money while their cars are parked and connected via a smart docking station creating a "virtual Powerplant". Example: When you park your car at the supermarket to go shopping, you would earn a rebate for each minute your car is "plugged" into the "system", supplying electricity to that supermarket. This rebate would show up on your final bill: "Earn while you shop". The same would apply when you're at home or at the office: Once you have connected your car to the docking station and supply electricity to a building, you earn money on-the-spot.

Quoting a famous German carmaker Board Member, who heard the idea for the first time: "This can only be realistic in 20 years." My reply: "If you don't start this year, it will be reality in 21 years...."

I must admit, the idea is not mine; others like Amory B. Lovins, or Prof. Bernd Hoehlein had this vision before. However, I believe that the time has come now to make it a reality.

The realities of today's Hydrogen and Fuel Cell industry are demonstrated at the Group Exhibit - Hydrogen + Fuel Cells at the
annual Hannover Fair, April 19-24, 2004. www.fair-pr.com

Engelhard Corporation (NYSE:EC) has been named a recipient of a Department of Energy (DOE) award to fund research in advanced fuel cell technology for vehicles, buildings and other applications.

Engelhard, its subcontractors and suppliers will receive an estimated $5 million over five years to develop new technology to recover and recycle precious metals from fuel cell systems.

Engelhard is a leader in the development and application of catalytic and sorbent technologies that improve the performance, safety and economics of fuel cell systems. The DOE award will support the company's additional efforts to develop technology and services that address the entire life cycle of a fuel cell.

"We are excited to receive this award from the Department of Energy and to be recognized as a leader in fuel cell technology," said Terry Poles, Engelhard's director of fuel cells. "The fuel cell holds great promise as a clean, efficient source of energy, but significant technical and cost barriers must be overcome. This award will help us remove one of these barriers."

Precious metals, such as platinum, are used in fuel cell systems to produce hydrogen and to generate electricity. Because of the high cost of precious metals, it is critical to fuel cell economics that the platinum and other metals be recycled.

Engelhard researchers will work to develop and demonstrate an economically viable process to recover and recycle precious metals used in fuel cell reformers and stacks.

Engelhard is one of 13 firms and educational institutions that will receive a total of $75 million from the DOE as part of the agency's commitment to the research, development and validation of hydrogen storage and fuel cell technologies. DOE's efforts in fuel cell research primarily focus on overcoming technical barriers to commercialization, including durability, high costs, heat utilization and catalyst development.

Engelhard Corporation is a surface and materials science company that develops technologies to improve customers' products and processes. A Fortune 500 company, Engelhard is a world-leading provider of technologies for environmental, process, appearance and performance applications. For more information, visit Engelhard on the Internet at www.engelhard.com.

IdaTech announced the installation of a 3.6-kW propane fueled fuel cell system in the Cascade mountain range near Bend to operate in an off-grid telecom application for field test and evaluation. The project was awarded to IdaTech as an additional funding grant provided by the Propane Education and Research Council (PERC) to accelerate the development of LPG fuel cell systems.

"IdaTech has demonstrated great progress in developing propane-fueled fuel cell solutions," said PERC President Roy W. Willis. "PERC is excited to work with them again to research and develop fuel cell technology that further strengthens propane's off-grid power generation offering."

The fuel cell system will undergo various operational scenarios common to an off-grid telecom site during the test and evaluation phase of the project.
The system's placement in the Cascade mountain range at 6,200 feet above sea level will also provide diverse environmental testing.

"With the ever-growing infrastructure and geographic expansion of the telecom and communications industries, the need for highly reliable and
environmentally friendly power solutions is becoming more and more critical," said Day Wireless Regional Manager Rob Russell. "The communications
infrastructure we build and operate provides critical communication services for various Federal and state government and services as well as private
industry. Developing the capability to power such systems from off-grid applications is important to maintaining their reliability and security."

"The development of this system in cooperation with our partners demonstrates our ongoing commitment to introducing multi-fuel fuel cell
solutions," said IdaTech President and Chief Executive Officer Claude Duss. "The experience gained from test and evaluation programs like this provide invaluable data to assure that our solutions will meet the needs of our customers."

In 2002, IdaTech received grant funding from the Council for the development and test of a propane fuel cell system based on IdaTech's FCS
1200(TM) platform. The success of this project led to a follow-on grant for the development of a propane-fueled fuel cell system for off-grid telecom
applications. The mutually beneficial relationship has allowed both organizations to be mutually proactive in supporting the propane and fuel cell
industries.

IdaTech's fuel cell solutions are based on a modular design, supporting interchangeable components, which enables IdaTech to accelerate product
development incorporating proven components and subsystems into customized configurations. The fuel processor module's compactness and capability to produce high-purity hydrogen from a variety of fuels allows design engineers to incorporate IdaTech's fuel processor modules into any PEM or alkaline fuel cell system creating significant time and investment savings.

IdaTech is developing fuel cell solutions based on its proprietary multi-fuel fuel processing technology and fuel cell system integration capabilities. With the support of strategic partners, the company's solutions are being deployed on a global scale for stationary and portable applications. IdaTech is a subsidiary of the Boise, Idaho-based energy and technology holding company IDACORP, Inc (NYSE: IDA).

Ballard Power Systems Inc. may be headquartered on the other side of the continent, but the fuel cell company sees Lowell as a candidate for its expansion plans.

While nothing is certain, Vancouver-based Ballard could make a significant investment at its Industrial Avenue plant, a move which would mean about 100 additional jobs and a long-term commitment to the location.

Chief executive Dennis Campbell and local plant manager William Foulds formally broached the possibility yesterday during an afternoon meeting with Gov. Mitt Romney, and also with The Sun beforehand.

"Lowell has become increasingly important as we expand our business, and we're evaluating different alternatives along with that," said Campbell, in an interview at the local facility.

Campbell said the company is analyzing all of its operations, including those in Dearborn, Mich., and Germany, to see which facility is the best fit for expansion. Characteristics of each area's labor force, available tax credits, existing space and work force are among the factors being considered.

"We see a lot of those characteristics here in Lowell," Campbell said. "Clearly, Lowell has a lot going for it, because we have a great technology here, tremendous experience levels and a seasoned team of workers already in place."

Campbell declined to say how much of an investment is possible, other than to say it is "significant." As for time frame, there is no immediate need for increased operations, so executives are apt to take their time.

"We're hoping, obviously, that they do decide to expand their operations here," said Sarah Godbout, a spokeswoman for Romney.

Ballard whose Lowell operation focuses on carbon fibers and gas diffusion electrodes (the carbon materials center of excellence) considers the local facility a vital piece of its systems manufacturing. Considered the industry leader in Protein Exchanged Membrane (PEM) fuel cells, Ballard makes and markets cells whose applications include hydrogen-powered vehicles.

Already, 10 prototype Mercedes buses in Europe have employed its technology, not to mention several cars. Furthermore, a Mercedes SUV has completed a 3,262-mile cross-country trip, to showcase how a hydrogen-powered vehicle can function despite being in high altitudes, cold weather and desert heat.

One issue that makes local expansion more appetizing is the size of the existing plant.

"We're under-utilizing it as it now stands, so we could fit more equipment here easily," said William Foulds, managing director of the facility at 2 Industrial Ave.

Ballard now has 66 Lowell-based employees, but the building housed as many as 400 when Textron Systems operated there. Textron sold the business to Ballard for $12.8 million two years ago, and an adjoining parking lot was sold to Gervais Ford, which now uses it as part of its dealership.

Other Ballard facilities boast more workers, though. There are 250 workers in Germany and 120 in Michigan, and about 1,400 workers in total, including the Vancouver headquarters. The company recorded $119.6 million in sales for its most recent fiscal year, has no debt, and holds some $355 million in free cash.

While Campbell admits many obstacles remain before mass production, he says too many myths persist about hydrogen.

"If someone were to walk into the Department of Transportation today and say we're going to build a car, then put 20 gallons of gasoline under the trunk, there's no way it would happen," he said. "Hydrogen has a lot of favorable characteristics, it's amazingly safe and it's a high-energy material."

Toyota is taking a real-world approach to the 2003 Challenge Bibendum by showcasing the technology it has available today in hybrid, fuel cell and internal combustion vehicles. Participating in the testing and media drives will be the all-new 2004 Prius, the current generation Prius, a PZEV Camry, Toyota Sienna minivan, Lexus RX 330 luxury utility vehicle and Toyota Fuel Cell Hybrid Vehicle.

"Challenge Bibendum is a great opportunity for us to show the wide range of environmental technology in the vehicles we have on the road today", said Dave Hermance, Toyota executive engineer of environmental technology, "We're looking forward to being a part of this unique glimpse into automotive technical advances."

2003 Toyota FCHV SUV: production hybrid fuel cell vehicles leased by University of California at Davis and University of California at Irvine.

Toyota FCHV

2004 Toyota Prius: the all-new model and next generation hybrid from Toyota is larger, cleaner, more powerful and gets twice the fuel mileage of the best 2003 mid-sized sedan in the U.S. It will be available to consumers in October.

2004 Lexus RX 330: production SUV with a gasoline powered, internal combustion engine with LEV II Ultra Low Emissions (ULEV) making it 71 percent cleaner with respect to smog-forming emissions than the previous generation RX. Next year, this model also will be available with a hybrid engine.

2003 Toyota Camry PZEV: production mid-size car with a gasoline powered, internal combustion engine that has achieved Partial Zero Emission Vehicle (PZEV) status.

2003 Toyota Prius: first mass-produced hybrid vehicle featuring a gasoline/electric hybrid engine.

2004 Toyota Sienna: production minivan with a gasoline-powered, internal-combustion engine. The Sienna also meets LEV II ULEV emissions standards and is 82 percent cleaner with respect to smog-forming emissions than the previous generation Sienna.

"Toyota is one of the leaders in hybrid and advanced technology vehicles and we're thrilled to have some of their newest and best vehicles showcased at Challenge Bibendum," said Ron Musgnug, Michelin's project manager for the 2003 Challenge Bibendum. "Toyota has put environmentally friendly cars in the hands of the driving public and we're glad they are giving Challenge Bibendum a sneak peek at some of their latest developments."

ROBINS AIR FORCE BASE, Ga. -- A new fuel cell is giving airmen here a sneak peek at the Defense Department's proposed plan for using hydrogen as an alternative fuel source.

The test unit installed here is the fifth in the Department of Defense and the first to be evaluated on an Air Force base, officials said.

Thirty military installations have been selected world-wide as test sites for the $80,000 electrochemical device that generates electricity by combining hydrogen and oxygen -- producing water as its by-product.

Carl Perazzola, advanced alternative power technology transition section chief, said turning to alternative fuel sources is a way the U.S. can preserve its fossil fuel resources.

"Between 60 and 80 percent of our bases have natural compressed gas flowing through the base for heating and cooling loads," he said. "So, we began looking at it as an alternative fuel source."

Reaching temperatures up to 700 F, the fuel cell captures heat to produce hot water for Robins' firefighters' showering, laundering and cooking needs, and scrubs out sulfur to purify the hydrogen for fuel usage.

Since President George W. Bush's State of the Union Address in January, which highlighted his $1.3 billion request to Congress for fuel cell funding, fuel cells have gained more national prominence. They are seen as a way to reduce DOD's fuel bill and help bases comply with the Clean Air Act of 1970.

Robins AFB has partnered with the U.S. Army Engineer Research and Development Center Construction Engineering Research Laboratory, the funding source, to make the base a test location for the alternative fuel technology.

Col. David Nakayama, Support Equipment and Vehicle Management Directorate director, said if the system proves to be reliable, it may become more than an alternative fuel source. It may become the fuel source norm.

"The United States imports (more than) half of the petroleum that we use," he said. "There are significant social, political and military implications with that because 64 percent of the world's oil comes from the Middle East. The cost of foreign oil dependence is no longer an economic environmental issue. There are serious strategic concerns."

Nakayama said replacing fossil fuel sources with alternative solutions is not something that can be dealt with tomorrow, it must be faced today.

"We're very fortunate to have the first fuel cell beta test site at Robins," he said. "Fuel is one of the most difficult things to move in any conflict, in any campaign. If we can solve that, we've not only solved a great deal by reducing the logistical footprint of our deployed troops, but we've changed how we defend American interests around the world."

Tokyo Gas Co. (TSE:9531) and Mitsubishi Heavy Industries Ltd. (TSE:7011) have jointly developed a highly efficient way to extract hydrogen from city gas for use as an energy source for fuel cells.

The success enhances the possibly of using existing natural gas fueling stations as sites for the production and supply of hydrogen to fuel cell cars.

Tokyo Gas and Mitsubishi Heavy have developed a special membrane that allows only hydrogen molecules to pass. Interspersed in this membrane are tiny grains of palladium that catalyze the separation of hydrogen from the city gas. The technology can extract around 80 per cent of the energy value of city gas in the form of hydrogen -- about 10 percentage points higher than conventional heat reaction methods of hydrogen extraction.

The new technology could boost the overall energy efficiency of a fuel-cell-powered car to 40 per cent, a significant improvement over the roughly 26 per cent energy efficiency of hybrid cars.

Tokyo Gas plans to conduct performance tests of the new extraction method at a hydrogen station it operates in Tokyo starting next month. The firm operates half of the 80 or so stations that supply natural gas in the Kanto region, and by using the new technology it may be able to employ this existing infrastructure for the extraction and supply of hydrogen to fuel cell cars.