The industrialized world must inexorably move into the "Hydrogen Economy" -- simply as a matter of survival as the planet Earth's fossil fuel resources approach depletion. A universe of "alternative" energies continue to be promoted -- but without a known exception, they are not viable over the near to longer term for our energy-dependent civilization. An example of a dubious alternative energy -- Ontario just announced a $300 million-40 megawatt-one million solar panel power generation facility covering 855 acres (420 football fields!) that will service only 0.2 of 1% of Ontario's residential demand (about 6,000 homes!).

You can count on the fact that the future worldwide hydrogen energy web -- the "Hydrogen Economy" -- will be no less than the historic catalyst for the next technological, commercial and social revolution determining the future of the human condition on the planet Earth. The big picture -- the global revolution that will derive from the "Hydrogen Economy" -- will evolve for many years, over decades -- and for the 21st Century, at least. We will witness a movement as powerful in its economic and political implications as was the development of coal and steam power in the 19th Century -- fossil fuels and the internal combustion engine in the 20th Century -- and in this century, the "Hydrogen Economy" energy revolution.

This century's energy regime will, in its fundamental nature, be environmentally clean and non-polluting. Depletion concerns will not be a factor because of the inherently inexhaustible hydrogen resources. Further, and of overriding benefit to civilization as we know it, all peoples of all nations of the planet Earth will now have equal access to unlimited national "home-grown" energy resources required to kick-start and sustain long term economic development. For centuries, the luck of the geological draw, in only a random selection of geographic regions, determined those blessed with fossil fuel and other energy assets-- while the majority of less fortunate peoples and nations drained limited financial resources in open market purchases for their essential energy requirements.

Phoenix is in an advantageous position to assert a leading role in the "Hydrogen Economy." We recently reached a major milestone with the grant of U.S. Patent 7,122,171 (17 October 2006) covering the Company's innovative hydrogen gas generation technology on which Phoenix holds worldwide exclusivity through our U.S. subsidiary -- Phoenix International Energy Inc. The Phoenix position is secured in a long term Technology License Agreement entered into with a major U.S. research university; the intellectual property rights are protected for a period of 20 years beyond the initial 17-year life of the patent.

The U.S. patent also provides a measure of confidence that no "prior art" has been determined that conflicts with the Company's proprietary technology -- and validates what we consider as the "foundation" technology covering the light-powered generation of very low cost, pure hydrogen gas from ordinary water feedstock. The intellectual property, as recognized by the comprehensive patent, enhances the credibility of the "foundation" technology -- which, in turn, confirms this development as a longer term corporate "hard asset" that secures our financial commitments to the project.

Alternatives to the "Hydrogen Economy" are not feasible, nor likely. No alternative energies come close to matching the universal availability of hydrogen -- exploitable from a common water feedstock. Hydrogen can be generated from ordinary water supplies -- as an inexhaustible energy resource -- contrasted to the certain depletion, worldwide, of fossil fuel reserves.

When the fossil fuel era reaches its inevitable demise -- valid alternatives become a life-or-death essential. Biofuels, as ethanol and biodiesel (corn, sugarcane and other farm commodities), are not planet Earth friendly, except as a very short term, relatively minimal addition to the fuel energy "pot" (and then not questioning ethanol's dubious economics nor its indicated negative energy balance!). Interesting scenarios evolve when sourcing agriculture-based feedstocks as alternative fuels-- if only the 2017 (a decade hence) ethanol production target is to be met -- 100% of the current U.S. corn crop must then be converted into fuel ! Competition for farmed grain production between ethanol for energy, and the food needs of humans and livestock, must be addressed! Another major consumer market -- U.S. transportation applications -- would require 100% of the aggregate annual farm production of U.S. corn and soybeans -- converted into biofuel -- to supply only about 11% of that sector's current fuel consumption !!

Alternatives to the fossil fuel regime also face the rapidly rising environmental costs of carbon dioxide emissions, greenhouse gases, global warming effects -- and for maintaining longer term environmental stability. The "Hydrogen Economy," generating inexhaustible pristine energy, with benign environmental impact, provides the only longer term "clean" alternative. It will transform how we power our vehicles, our homes and our industries. To better understand the capabilities and resources of the "Hydrogen Economy" -- consider the following basic facts pertaining to that ubiquitous element -- Hydrogen:

• Hydrogen is by far the most abundant of the planet Earth's elements, accounting for about 75% of its mass and 90% of its atomic weight.
• Hydrogen is a colorless, odourless, tasteless and non-toxic gas, which is considerably lighter than the air in our atmosphere.
• One kilogram of Hydrogen provides the equivalent in energy value of 1 gallon of gasoline.
• The current production of industrial Hydrogen, largely employed in oil refineries and in the expanding oil sands' crude bitumen upgrading process, could power about 30-million automobiles or provide the energy needs of up to 8-million homes -- safely, efficiently and without any damaging environmental impact. Hydrogen is not an untried, unproven industrial gas.

In the energy sector, few spades are being called spades -- when describing the realistic, near term future of fossil fuel availability. Currently, world oil consumption is about 85-million barrels per day -- realistically expected to increase to over 115-million barrels per day by 2030. Oil finding rates -- increasingly difficult and costly-- are now only about 50% of current oil consumption. Does more need to be said for the inevitable "Hydrogen Economy" ??

It is evident that a viable "Hydrogen Economy" will result in a dramatic economic impact on the global energy universe, and its major players -- as they now operate!