AFTC and the Ultimate BioFuel

Currently a multitude of factors are aligning to drive a paradigm shift in the troubled automotive and energy sectors towards increased utilization of clean energy sources. To give you an idea of just how much focus is now being placed on alternative energy, the UN Environment Programme (UNEP) is forecasting global spending on green energy projects to surge 300% from $150 billion in 2007 to more than $600 billion by 2020. Clearly, the search is on for the ultimate bio-fuel and the replacement for conventional fossil fuels.

In response to this trend, dimethyl ether (DME) is quickly gaining recognition as one of the most efficient alternative energy sources and is already being evaluated in 3rd generation field tests by auto-industry leaders including Volvo AB.

In the midst of a heated presidential debate, alternative fuel sources is a favorite topic in politics and the media. Our newest portfolio company, Alternative Fuel Technologies Inc. (OTCPK: AFTC) has positioned itself to meet a rising alternative energy demand while appealing to eco-enthusiasts. AFTC announced the fulfillment of a DME contract with Volvo today worth more than $1 million and is positioning itself to become a leader in an infant market poised to become the world's largest energy sector.

While the institutional financial marketplace flounders today, investors are being forced to diversify their portfolios based on their own research. Individual investors are necessarily putting their investment dollars into companies that hold the potential to revolutionize the industry of energy.

AFTC: Fueling the Future

Since the mid-1990's AFTC has been developing prototype fuel systems for diesel engines that allow them to burn DME, an ultra-clean alternative fuel. Their products have been in use by Volvo since 1995 and according to AFTC have no known competition from a technical standpoint

The CEO, Jim McCandless, is a DME industry guru with a very impressive resume. He's invented/developed advanced fuel systems for DME and promoted DME globally in 7 countries, conducting roughly 50 presentations to audiences worldwide. He holds at least 12 U.S. patents and has been responsible for numerous multi-million dollar projects, some of which encompassed the supervision of hundreds of engineers. If, like so many "savvy" investment researchers, you Google Jim McCandless and DME together and you'll quickly see that he is an expert in his field.

AFTC is providing Products for Today and Tomorrow

In regards to the company's product offering, AFTC.PK has developed (and is continuing to develop) DME fuel systems for the average vehicle in today's market but also anticipating and building systems for a future market. AFTC currently provides retrofit systems that can be used with virtually any diesel engine to help improve fuel economy and reduce emissions. With diesel flirting with $4 per gallon in many regions of the U.S., this product line is certainly becoming an increasingly attractive proposition for consumers as well as the transport business which predominantly subsists on deisel.

AFTC also develops and sells prototype fuel systems for research and testing purposes and aspires to ship commercial systems to automotive manufacturers by 2011. These systems will be implemented into vehicles prior to them hitting the lots.

What I truly find compelling about AFTC is that their technology can be applied to a vast array of markets, not just passenger cars. Some of these include construction equipment, farm equipment, heavy-duty trucks and buses, and diesel generators. In addition to the millions of diesel-powered vehicles on the road currently available for retrofitting, AFTC can also target virtually any piece of equipment running on diesel fuel for both retrofit and future implementation of its soon-to-be perfected advanced DME fuel systems. This vast market of potential clients attests to the range of demand that the DME fuel system can have.

In addition to its 13 year working relationship with Volvo, AFTC has also furnished Ford of Europe with prototype systems. From a geographic perspective, the company is also pursuing opportunities and/or providing prototype systems to customers in virtually ever corner of the globe including Japan, China, India, Korea, and Sweden. The potential for growth here is enormous and, from what I can tell from a bit of digging, management is highly aggressive and well-respected globally. With just one fuel system in place with a large manufacturer, AFTC can begin to target its deep pool of prospects - in the States and abroad.

What is DME and Why is it So Great?

Dimethyl ether is an ultra-clean fuel that can be produced from a multitude of readily available and abundant natural resources including biomass, methanol, coal, and natural gas.

In regards to its benefits over conventional fossil fuels, for starters, DME can reportedly be produced at ½ the cost of petroleum fuels when oil is valued at $125 per barrel. With experts, including Weeden & Co. energy analyst Charles Maxwell, forecasting $300 barrel oil by 2015 and the United States expected to shell out roughly $440 billion on foreign oil in '08, DME represents a very compelling alternative to conventional fossil fuels on price alone.

In addition to its advantages in regards to price, DME can be used in diesel engines with minimal engine modification. Also, the fuel is non-toxic to both humans and the environment, emits 75% less overall particles than diesel fuel and 90% less NOx emissions than standard auto fuels. In regards to engine performance, DME promotes roughly 30% higher fuel economy in passenger cars than gasoline and facilitates torque and power similar to diesel operation.

To top it all off, DME can be easily transported and distributed through existing propane/LNG infrastructure. As we've seen with Ethanol, ease of distribution has been a major hindrance to the widespread adoption of many alternative fuels.

From what I've read, DME is absolutely poised to be the fuel of the future with its main barrier to widespread global use being a lack of mass production facilities. No demand goes unnoticed in the energy sector though. Plans are popping up around the world for the construction of high volume DME plants. While China appears to be leading the way, it seems imminent that the rest of the world will follow suit as demand for the new fuel source ramps up and initial facilities are successfully brought online.

I've spent the greater part of the past two weeks researching the AFTC value proposition and business model as well as the topic of DME as a replacement to conventional fossil fuels. In a slew of alternative energy companies worth putting your portfolio behind, AFTC stands very well-positioned to become a major catalyst for the development of a robust global DME fuel market.

With a million dollar-plus contract in hand with Volvo and a dominant DME fuel system technology almost ready for commercial use, AFTC is certainly one to watch in 2008 and beyond. Check the OutcastTrader Blog periodically for updated coverage on this and other companies that stand to change the way we think about energy and natural resources.