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Just some points to consider about Fuel Cells.

UTC via Pratt and Whitney and in a later re-orged business unit have been in the Fuel Cell market for at least 30 years. They designed the fuel cells used in the manned space program. It has been difficult for a number of not so obvious technology and economic reasons for this technology to expand and prosper in the commercial field.

Aside from Hydro, the vast bulk of all energy is produced via heat engines of some kind (steam and gas turbines, internal combustion piston engines etc.) and those who have taken thermo know that the maximum efficiency is much lower for heat engines than other types of engines. For example, electric motors are far more efficient than gasoline or diesel engines.

But, fuel cells require hydrocarbon or hyrdogen as their fuel source and do not extract energy from the heat of combustion, but rather from the electron exchange that occurs when the fuel is oxidized (i.e. burnt). The efficiency is much greater than heat engines and you can also extract energy or otherwise use the heat that is produced.

The important thing to keep in mind is that Fuel cells essentially consume the same fuel as other engines and therefore might possibly reduce but probably not eliminate our requirement for foreign oil.

The advantage occurs when it is seen that the breakeven point for Fuel Cells is better than that of the conventional heat engine method of producing energy. But this could lead to an even greater consumption of hydrocarbon (fossil) based fuels, as things such as electricity and the like become cheaper as a result. Automobiles would use less gas and be cheaper to run so more people might buy them as a result.

I am surprised that UTC, a leader in this technology, has not been able to benefit from it long before now. I think it might have something to do with the fact that much of the electricity is produced either by hydro or coal burning plants. Coal is not so easy to use in a fuel cell as is a low sulfur liquid fuel. This limits somewhat those markets where the fuel cell can be successful.

But I think we are close to the commercial realization of fuel cells and if that is the case, then UTC should do well as a result.

Jack



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