Byline: Drew Winter

Skeptics say hydrogen-powered fuel-cell vehicles (FCVs) are either an environmentalist pipedream or a scam by auto makers and politicians that promises a long-term solution to the world's energy problems so they can avoid immediate action.

Even some advocates say hydrogen-fuel technologies will not be ready for two or three decades, held back by fundamental problems with cost, storage, fuel-cell durability and a non-existent distribution network.

What's more, the most popular commercial method for producing hydrogen, separating it from natural gas, is an environmentally dirty process that negates many of the benefits of using hydrogen as a fuel.

But you won't find many hydrogen skeptics in Iceland, a ruggedly beautiful island nation in the North Atlantic known for its glaciers, waterfalls and volcanoes. It is the first country in the world to commit to developing a hydrogen-based economy.

Isolated from the rest of Europe and lacking fossil fuels of its own, Iceland has been studying hydrogen technologies and other renewable resources for three decades.

It currently generates all of its electricity from geothermal and hydroelectric power, and it has eliminated fossil fuels from all stationary energy use, leaving only vehicles and its fishing fleet dependent on petroleum.

Renewable resources account for 72% of Iceland's energy supply, which the country claims is the highest share in the world.

For years, Iceland has contemplated exporting its clean and cheap electric power to the European mainland, and, in one sense, it already does, by smelting primary aluminum and exporting ingots.

But Iceland now plans to use its abundant geothermal and hydroelectric power-generating capacity to become a major user and environmentally friendly producer of hydrogen.

"In 1998, the government made a clear statement toward a sustainable hydrogen economy," says Valgerour Sverrisdottir, Iceland's minister of Industry and Commerce.

"The long-term aim is that renewable hydrogen fuel will replace the fossil fuels as soon as it becomes economically and technically possible."

Even though Iceland is a tiny country with only 300,000 inhabitants and 190,000 vehicles (many of them SUVs), it could serve as a prototype for all nations seeking to reduce their dependence on fossil fuels.

With gas and diesel prices nearing the equivalent of $8 per gallon, Icelanders would be riding in hydrogen-powered vehicles tomorrow if they could. Some already are: A DaimlerChrysler AG hydrogen-powered fuel-cell bus plies a daily route through the capital city of Reykjavik, refueling every day at the world's first hydrogen filling station, built in 2003.

The bus is part of a European Union project launched in 2003 that placed fuel-cell buses in 10 European cities. The project recently was extended for another year in seven of the 10 cities: Amsterdam, Barcelona, Hamburg, London, Luxembourg, Madrid and Reykjavik.

The buses have withstood the cold winters of Reykjavik and Stockholm as well as high heat in Madrid, and survived more than 2,000 operating hours without any power losses, bringing fuel-cell lifetimes closer to those expected of conventional bus engines.

Officials of the Clean Urban Transport for Europe project say the durability of the fuel-cell stacks has been much better than anticipated.

Despite its economic troubles, General Motors Corp. remains among the most bullish on the potential of fuel-cell propulsion systems.

The auto maker recently used Iceland as a backdrop for the start of a new campaign aimed at demonstrating hydrogen-powered vehicles are closer to reality than commonly perceived, and that huge amounts of hydrogen easily can be accessed in the future to support hundreds of millions of hydrogen-powered vehicles.

The Paris-based International Energy Agency (IEA) warned late last year that even under the most favorable market conditions, hydrogen FCVs would enter the mainstream by 2025 and power about 30% of the global vehicle population - about 700 million vehicles - by 2050.

Even ardent supporters at the National Hydrogen Assn. annual conference in Long Beach, CA, in March predicted it would take until 2020 or so before mass production allows affordable FCVs.

GM is more optimistic. It already has invested $1 billion in fuel-cell development and has earmarked another $1 billion for future work. The company says its technology is advancing rapidly, and roadblocks are overblown with regard to storage, durability, distribution and commercial production of hydrogen.

GM is not alone in its frustration over hydrogen's flagging image. Despite billions of investment dollars by most of the world's largest auto makers and numerous clever public-relations gimmicks, hydrogen as a fuel gets little respect in the public debate over energy independence and global warming.

Detractors insist the technology is too far-fetched. Hydrogen also is being overshadowed by more practical technologies that already are being implemented, such as hybrid-electric vehicles (HEVs) and ethanol fuel.