New Venture Aims To Create World's First "Hydrogen Economy"

February 17, 1999, Reykjavik - An Icelandic consortium, Vistorka hf. (EcoEnergy Ltd.), signed a Co-operation Agreement with DaimlerChrysler, Norsk Hydro and the Royal Dutch/Shell Group for a joint venture to investigate the potential for replacing fossil fuels in Iceland with hydrogen and creating the world's first "hydrogen economy".

The joint venture, called the Icelandic Hydrogen and Fuel Cell Company Ltd., with an equity capital of $1 million, will test various applications using hydrogen or hydrogen carriers with fuel cells. One of the first results could be a hydrogen/fuel cell-powered bus service in Reykjavik, with additional projects being introduced between 2000 and 2002.

Fuel cells create their own electricity. Oxygen from the air and hydrogen fuel are combined in a chemical reaction which produces electricity and water. Overall vehicle efficiency can be improved by 50 percent with no exhaust emissions.

In a ceremony in Reykjavik the Minister for environmental affairs, Mr. Gudmundur Bjarnason, said: "The government of Iceland welcomes the establishment of this company by these parties and considers that the choice of location for this project an acknowledgement of Iceland's distinctive status and long-term potential. The initiative taken by the parties involved in this project deserves to be applauded and respected."

The majority partner, Orkís hf., is owned by a group of Icelandic companies, led by the New Business Venture Fund. Orkis has been established specifically to take part in the joint venture. Each of the three other partners has equal rights and shares and already has expertise in this field. DaimlerChrysler has been developing the fuel cell technology for automobile applications since 1991 and intends to mass-produce fuel cell vehicles for commercialization by the middle of the coming decade. Norsk Hydro has a long history in the production of hydrogen and hydrogen carriers and the development of hydrogen systems. Shell has recently set up a hydrogen business and has developed technology which can convert liquid fuels into a hydrogen-rich gas.

Dr. Ferdinand Panik, the head of fuel cell projects at DaimlerChrysler, said: "We support the Icelandic vision for a fuel cell and hydrogen economy, because this is a great opportunity for industry and government to jointly create an innovative and future-oriented program. The Icelandic approach may become a pioneering example of sustainable economic and industrial development."

Norsk Hydro's head of research and development, Bjørn Sund, said: "Norsk Hydro has a long history of production and industrial use of hydrogen. We believe that hydrogen and fuel cells offer a great potential for future applications in the energy markets, and that cooperation between the energy, automotive and other industries is essential for providing solutions to the environmental challenges related to consumption of energy. The Icelandic initiative provides a good basis for further development of such cooperation."

Jan Smeele, acting chief executive officer of Shell Hydrogen, said: "Shell is continually looking for opportunities to participate in new energy solutions and the introduction of fuel cells in mobile and stationary applications could possibly revolutionize the world's energy picture. Iceland has shown the dedication to play a pioneering role in this process. We have been active in Iceland for more than 70 years and are very pleased to get a chance to participate, together with our Icelandic partner Skeljungur hf., in this exiting new venture."

The joint venture ultimately aims to convert both the public and private transportation sectors, including fishing vessels. Work will also be carried out in to the effective production, storage and distribution of hydrogen and hydrogen carriers.

Iceland has large potential for renewable energy sources which, so far, have only been harnessed to a limited degree. Some 67 percent of its primary energy consumption is supplied by hydro- and geothermal sources, the highest percentage share among OECD countries. The Icelandic government has further development of the renewable domestic energy resources on its agenda. Such use could contribute significantly to reducing the emission of greenhouse gases.

DaimlerChrysler is one of the world's leading automotive, transportation and services companies. Its passenger car brands include Mercedes-Benz, Chrysler, Dodge, Plymouth, Jeep®, and smart. Commercial vehicles are produced under the Mercedes-Benz, Freightliner, Sterling, and Setra brands. The group also manufactures aircraft and equipment at DaimlerChrysler Aerospace (Dasa) and offers financial and other services through DaimlerChrysler Services (debis). With 430,000 employees, DaimlerChrysler achieved 1998 revenues of approximately US$ 148 billion.

Norsk Hydro is Norway's largest publicly owned industrial company. Its principal activities are in agriculture, oil and gas, light metals and petrochemicals. In 1997, Hydro generated sales of approximately NOK 96 billion and had operating income of NOK 10,7 billion. The company employs about 39,000 individuals, thereof some 18,000 in Norway.