(FORTUNE Magazine) – WHY IS this scientist smiling? Because he may have won a small prize in the cold fusion lottery. No, not those $25 boxes of pennies -- the pennies are there to shield his instruments from any gamma rays that might confuse their readings. Just possibly his brand of cold fusion may turn out to be useful in producing energy on a commercial scale. Even if it doesn't, he says, he has planted a seed that science can nourish into a beautiful flower. But you thought cold-fusion-in-a-flask was dead? Well, yes and no. The scientific establishment has generally pooh-poohed the claims of B. Stanley Pons and Martin Fleischmann, the University of Utah team that first announced it had fused hydrogen ions in a jar of water at room temperature. But scientists are not so dismissive of Steven E. Jones, the happy Brigham Young University physicist in the photograph. The cold fusion drama is still unfolding. The promise of fusion is enormous: power that is clean, relatively cheap, and virtually limitless. Joining light atoms like hydrogen to produce energy may have few of the drawbacks of splitting heavy atoms like uranium, the fission method used in ordinary nuclear reactors. For nearly four decades scientists have been trying to reproduce the mighty fusion processes of the sun at tremendous pressures and temperatures, in huge test reactors like the one at Princeton in the photograph at right. If fusion can be achieved at room temperature in simple laboratory apparatus, and the technique can be made commercially feasible, the impact will be almost incalculable on a world dependent on a diminishing supply of fossil fuels that foul the air as they burn. The Princeton machine is called a tokamak, a Russian acronym meaning doughnut-shaped chamber. It represents one of the old-fashioned approaches to achieving fusion on the scale needed to run huge power plants. In what is called magnetic confinement, the massive machine compresses hot fusion fuel into a gaseous plasma that would ignite to produce sustained, controlled + energy. General Atomics of San Diego has sunk millions into research on the process.

KMS Fusion of Ann Arbor, Michigan, is a leader in the other longstanding hot fusion method, which uses lasers to compress and ''burn'' tiny glass fuel pellets the size of a grain of salt (see diagrams on the following pages). While fusion physicists freely use terms like ''burn'' and ''ignition,'' they don't intend the words in a chemical sense. Fusion burning produces energy a million times more efficiently than any conventional fuel, which burns by combining hydrocarbons with oxygen and produces oxides of carbon and nitrogen that create smog and damage the ozone layer. The overwhelming stumbling block is that no one has succeeded in getting a fusion reaction to the critical stage where it throws off more power than it absorbs. At best, with its current fuel, the Princeton tokamak has generated only a fraction of 1% of what it consumes. If either hot or cold fusion ever reaches the point where it returns a lot more energy than it uses up, and the process is commercially practicable, the world will have a nearly inexhaustible fuel supply. The main components of fusion fuel are deuterium and tritium, the heavier chemical forms of hydrogen; the first occurs naturally in water, and the second can be readily obtained from conventional nuclear reactors. Oceans, rivers, and lakes all contain enough deuterium to last billions of years. Fusion power could make any country energy- independent. CRITICS such as Lawrence M. Lidsky, an MIT nuclear engineer who abandoned fusion after 20 years and now works on gas-cooled fission reactors, have questioned the very essence of the hot fusion program. Lidsky feels that deuterium and tritium are the wrong fuels to use. They produce neutrons in such superabundance, he says, that they could damage the reactor structure; also, because tritium is radioactive, it could create some of the same contamination problems that are inherent in conventional nukes. Harold P. Furth, director of the Princeton University Plasma Physics Laboratory, home of the largest American tokamak, concedes Lidsky's point in part but insists that the difficulty can be overcome by developing the proper ceramics and other impervious materials. While hot fusion shows promise in the laboratory, its future as an economic reality is sufficiently uncertain that many experts now call it the toughest project in the history of science. Says David O. Overskei, a General Atomics . senior vice president: ''We've made significant progress, but nothing anyone would call a breakthrough.'' Even if they do succeed, hot fusion scientists don't see fusion reactors in operation before the year 2025 or maybe not until 2050. Could cold fusion slip into the gap? Small amounts of it may actually be taking place in those supposedly discredited University of Utah experiments. Although scientists trying to duplicate them have seen no sign of familiar fusion reactions, and most have concluded that the Utah process is purely chemical, a rarer type of fusion never before observed could conceivably be happening on a minuscule scale. So don't give up on cold fusion yet. The furor over fusion-in-a-flask could be just the opening salvo in the battle to harness cold fusion for energy production. Whatever else they may have done, the University of Utah scientists have at least energized physicists and chemists everywhere. If not this time around, then at some future date cold fusion may become reality. JONES'S DISCOVERY, if it proves out, could be one pathway. While his lab and that of the University of Utah team are only 45 miles apart, the Utah and BYU scientists had been working independently along strikingly similar lines. Both used electrochemical techniques to pass a current between electrodes in a chemical solution, but neither lab knew what the other was up to -- and they arrived at dramatically different results. Jones, quiet-spoken and modest, never claimed to have invented a magic energy box. He says he has produced less than one neutron a second -- a pittance in hot fusion terms. That's partly why his peers welcomed his findings more cordially than the University of Utah team's. Jones is quick to say that as of now his work is useless for producing energy -- and he readily concedes there's a chance he is seeing merely tiny peaks in background neutrons naturally present in the environment rather than fusion neutrons thrown off when two deuterium atoms join to form an isotope of helium. Johann Rafelski, a theoretical physicist from the University of Arizona who works with Jones, is less guarded. He thinks that if Jones's level of neutron production is real, once the phenomenon is understood there is a genuine possibility that the reaction can be scaled up to generate useful energy. One thing is certain: Even the most skeptical physicists cannot argue that cold fusion is impossible in principle. One type of room-temperature fusion has been indisputably achieved in a simple chamber containing deuterium and tritium gases; physicist Luis Alvarez of the University of California at Berkeley, a Nobel Prize winner, first observed it in 1956. Cold fusion has also been shown to work in liquid and solid forms of hydrogen at extremely low temperatures. This type of cold fusion, originally postulated in the late 1940s, uses heavy subatomic particles called muons (pronounced MEW-ons). Injected into deuterium gas, muons replace the electrons orbiting the deuterium nuclei. Much like lead balls placed on the surface of balloons, the muons squeeze the atomic nuclei together, generating energy in the form of neutrons. The U.S. Department of Energy has been supporting research in muon-catalyzed fusion, as the process is known, since 1982. Most scientists, however, do not see it as a stand-alone source of energy -- at least not now -- but rather as a possible auxiliary to the more familiar hot fusion. Some think muon-catalyzed fusion could be put to work producing neutrons for use in making fuel for conventional fission reactors. EVEN IN SCIENCE, history tends to repeat itself. When Alvarez first observed muon-catalyzed fusion more than 30 years ago, he felt, as he said later, that ''we had solved all of the fuel problems of mankind for the rest of time.'' It turned out, though, that quite apart from the prohibitive cost of producing muons as catalysts, their lifetime is too short to provide a net gain of energy from the reaction. The muons' matchmaking ability is impressive: A single muon can precipitate as many as 150 ''marriages'' between deuterium nuclei by flitting from one set of atoms to another. But that's not enough to reach the energy breakeven point, much less produce more power than the process uses. Rafelski, the Arizona physicist, thinks that for muon-catalyzed fusion to be practicable, the number of nuclear marriages each muon makes would have to increase ''by another factor of two or three'' -- a result he thinks could be attained eventually. He adds that while no easy and inexpensive way to make muons exists today, such an apparatus could come along in the future. Two years ago he and Jones wrote an article predicting that one day muon-catalyzed fusion could drive steam turbines. Researchers digging frantically through the scientific literature recently discovered with amazement yet another type of cold fusion. It may be only a distant relative, and it's probably too weak to serve as an energy source, but it's apparently another example of the phenomenon. Soviet scientists reported in 1986 that they had recorded a few fusion neutrons emanating from cracked crystals of a compound of lithium and deuterium. The Soviets fired bullets at the crystals to fracture them. One theory is that the strong electric field at the spreading cracks in the crystals speeds up deuterium atoms so much that they collide and fuse. The same effect could occur in the deliberately cracked palladium and titanium crystals the Jones team has used. A FORTUNE reporter visiting Jones's lab recently was startled when Jones picked up a palladium electrode, knelt in a corner, and began hitting the electrode with a decidedly low-tech hammer. Bang! Bang! Bang! Bang! A scientist gone mad? Hardly. Jones was merely following Rafelski's suggestion to create more cracks in the metal, the way the Russians did with bullets, to see if more fusions could take place. Jones is also looking into achieving fusion under high pressure without using electricity or chemistry. He puts scraps of titanium into a stainless steel tube and then forces deuterium into the metal at about 1,000 degrees F. -- lukewarm compared with tokamaks or lasers. He hopes the deuterium will fuse. ''I think this process will work better than the other one,'' he says. HE WAS ENCOURAGED in his pursuit of not-so-hot fusion by a 1978 Soviet report that had found in certain metals inexplicably high ratios of the variants of helium produced by hydrogen fusion. Because helium cannot be made chemically, its presence invariably represents ''the ashes of fusion,'' in Rafelski's phrase. That suggested to the Russian scientists that fusion had taken place naturally on earth. But by what means? A Brigham Young colleague further whetted Jones's appetite by speculating that fusion might still be happening deep underground, produced more by high pressures than high temperatures. The small amounts of helium that volcanoes and hot undersea vents spew out might be fusion's fingerprints. If Jones's experiment generated any helium, the amounts would have been too small to measure because the experiment produced few fusions. Jones has said that, metaphorically speaking, if his experiment creates $1 worth of energy, then the Pons-Fleischmann scheme, if it really worked, would yield enough to pay off the national debt ten times over. Jones doesn't think the University of Utah experiments produce any heat by fusion. Most scientists agree. MOST SCIENTISTS also think hot fusion is a lot further along as a potential energy source than any other variety. The odds that one or more of those approaches -- hot or cold -- will prove out are good, though it may not be for half a century. ''One fusion neutron does not mean you have a new technology,'' says Rafelski. ''But if you open the door to a new direction, it's almost always true that something comes out of it. It took 200 years to learn how to light up this room with electricity after Luigi Galvani first produced an electric current in a cell full of chemicals and metals.'' By one estimate, despite all the hoo-ha, researchers around the world have been spending no more than $1 million or so a week to try to reproduce the disputed Utah results. In the age of big, expensive science, the laboratory equipment used in recent cold fusion work -- simple jars and electrodes -- seems refreshingly modest. The mammoth machines required for hot fusion research give an inflated impression of the size and cost of the fusion effort, but even so, hot fusion will consume only $514 million in U.S. funds this year -- close to the projected cost of a single Stealth bomber. Considering the energy independence fusion would make possible, even those inadequate amounts could help buy more security for the U.S. than a B-2 -- and more peace for a world that may soon be squabbling with growing violence over who gets what share of the diminishing supply of conventional fuels.