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Fossil fuels are bad pollutants, both BEFORE and AFTER they are burned. Before the oil is burned, they could pollute the ocean and kill birds. After the oil is burned, carbon dioxide and sulfur dioxide is emitted to pollute the air and destroy rain forests. But if oil is only partially burned, the pollution is much worse: it results in emissions containing carbon monoxide, a toxic gas which is several hundred times worse than carbon dioxide in its greenhouse effect; and various nitrogen oxides which kill infants and senior citizens; and worse, particulate matters which are cancer agents which cause millions of deaths per year. The world collectively generates a thousand BP oil spill environmental disasters per year by producing and burning fossil fuels, cumulatively killing many times more people than were killed in WW II.

Incomplete burning of fuel is a big problem, it reduces fuel efficiency and creates air pollution. Scientists have worked relentlessly to solve the problem. The biggest progress so far has been the global adaption of catalytic converters on automobiles. Using PGM metals, platinum, palladium and rhodium, as catalyst metals in catalytic converters, auto makers such as FORD (F), GM (GMGMQ.PK), and TOYOTA (TM) are the largest industry users of PGM. What occurs in catalytic converters is basically after-burning: the incompletely burned fuel is once more burned, this time more thoroughly in the catalytic converters, hence it cuts the pollutant emissions.

But catalytic converters do not solved all problems: They do not improve the fuel burning within the combustion chamber and hence do not improve fuel efficiency. Moreover, ocean traveling ships are currently not required to be equipped with catalytic converters, although there are pending new regulations which may finally impose such requirements on ships and also on gasoline-operated lawn machines.

This is going to change big time, thanks to a start-up called Eco Emissions Systems, founded in 2008. The idea is simple: just directly introduce the catalyst into the combustion chambers of diesel engines. Doing so makes the fuel burn more thorough and hence improves engine efficiency. It also means fewer pollutants are emitted into the air. The technology is already there: platinum can be use to make nano-solutions containing tiny particles of the metal. The liquid can be turned into moist matter and injected into the diesel engine combustion chamber through the air intake. The catalyst contained in the moist matter then meets the fuel and promotes thorough burning, resulting in fuel cost savings.

At roughly 10% or more fuel savings, a typical dry bulk ship could save $1M per year just in fuel cost. For a shipping company like DRYS, EXM or EGLE, applying the technology on a fleet of 40 ships means a saving of $40M per year. That is a huge boost to their financial bottom line.

Eco Emissions Systems (OTCPK:ECMZ) has patented the idea globally and they stand to rip huge profits from the patent. They are already well entrenched as their systems are being tested on a Holland America cruise ship, before being expanded to the whole fleet. I can see Royal Caribbean Cruises (RCL) and Carnival Corp (CCL) expressing interest soon. According to their web site, the company already has more than $132M documented product demands and that was in 2009, a mere one year after the founding of the company.

I would suggest another novel idea which might be worth billions of dollars to big oil companies like BP, XOM and [[CVX]]: Why not simply add the platinum containing nano-solution to the diesel fuel itself, and hence achieve the same fuel efficiency improvements, without the need to retro-fit existing diesel engines to modify the air intake system? This way, their diesel fuel products will be more competitive. But then I guess big oil may not like the idea: they want consumers to pay higher prices for oil and burn more fuels, not less. But if an idea can save consumers money, it will catch on like wild fire, regardless of whether big oil likes it or not.

Where is the investment opportunity here? The Eco Emissions technology, and similar technologies that put PGM catalysts directly into fuel combustion chambers can create huge demand for the PGM metals. Even though only a small amount of platinum is consumed, consider the fact that the world consumes one cubic mile of oil per year while producing no more than a cube of 8 feet worth of platinum annually, this new demand on PGM metals could mean a paradigm shift in the global supply/demand picture, sending the prices skyrocketing.

How do you invest in this opportunity? Venture capitalists might want to talk to Eco Emissions Systems and get a good gauge on what their growth potential is. For average investors, it's time to hoard physical platinum and palladium, and invest in two physical metal backed ETFs: PPLT and PALL. More leveraged play would be investing in stocks of platinum and palladium mining companies, like South Africa's Anglo Platinum (AGPPY.PK) and Impala Platinum (IMPUY.PK). Some keep referring to Norilsk Nickel (NILSY.PK) as a palladium play. But even though I keep mentioning Norilsk Nickel as the world's largest palladium producer, they are a nickel play, not a palladium play, as palladium is only their by-product.

Of course, my favorite PGM play remains Stillwater Mining (SWC) and North American Palladium (PAL). They are closer to home in North America, and they are the world's only primary palladium producers. SWC recently published a market study, A Case For Palladium, which documents how various factors, like the termination of the decades long Russian government palladium stockpile sales, and ongoing South African electricity crisis, could create a ten year bull market in palladium.

More than 95% of my 401K retirement account is invested in SWC and PAL, mostly SWC. I keep hearing people call me crazy on that. One day they will know it's crazy not to have a big chunk of that stock in your portfolio, knowing the huge potential in palladium. Cold Fusion which uses palladium was considered a crazy idea to begin with, but it's now getting more and more acceptance in the mainstream. Peak Oil is still considered a crazy idea by most, but it is a looming reality right this moment.

Full Disclosure: The author is heavily invested in SWC and PAL and owns palladium metal bullion coins. The author also owns shipping stocks mentioned: EXM and EGLE. The author currently has no position in BP or other stocks mentioned and has no connection to Eco Emissions Systems other than learning about it from the news.

Source: Eco Emissions Systems: Innovation and Potential for Platinum Group Metals