Don't look now, but Lockheed Martin (LMT 0.77%) might have just changed the world.

Lockheed Martin has a compact fusion reactor. Yes, that Lockheed Martin. Still shot from Lockheed Martin video.

On Oct. 15, in a laconic press release stretching to just 188 words, the nation's largest defense contractor announced that it has invented a way to harness fusion nuclear energy in the form of a compact fusion reactor, or CFR. The company said its CFR will be 90% smaller than previous attempts to build such a device, and it will be ready to go online "in as little as ten years."

Lockheed Martin stock promptly dropped 0.5%.

What is fusion nuclear energy?
In a nutshell, fusion nuclear energy is the energy that is released when you squish two atoms together to form a new atom. This is as opposed to what we ordinarily think of as "nuclear energy," a fission reaction in which modern nuclear power plants create energy by splitting atoms apart.

Self-deprecatingly, Lockheed Martin admitted that "fusion itself is not new." Indeed, the sun has been doing this particular trick for billions of years, taking hydrogen atoms, heating them to form an ionic plasma, and then combining them to form helium. Each time this happens, energy is released as a result of the "fusion" of the nuclei.

And this is why the idea of fusion nuclear energy is so attractive to Lockheed -- and really, everyone. As practiced by the sun, it's an exothermic reaction, putting out more energy than goes into initiating the reaction.

Our sun. Basically a big fusion nuclear energy reactor -- but not compact. Photo: Wikimedia Commons.

The trouble with fusion nuclear energy
Of course, the sun has a couple of legs up on Lockheed. First, the star doesn't have to control the energy it produces so as to avoid burning up all of its customers. Second, the sun already has the "hundreds of millions of degrees" of temperature that Lockheed Martin said are needed to keep atoms in an ionic plasma state, and to keep their nuclei fusing.

Lockheed said it addresses these issues by using "several alternative magnetic confinement approaches, taking the best parts of each" to create a magnetic field, or "bottle," to contain the fusion nuclear energy reaction. This helps maintain pressure, and heat, for the plasma to remain hot. It also is possible to release the energy in a controlled fashion. The company was not too specific about exactly how it gets the magnetic field to form, or to control the reaction, or why its approach is better than those other scientists have tried in the past. But it did say that it has "several patents pending" for its approach.

The trouble with Lockheed Martin stock
If Lockheed Martin's idea is so great, the question remains: Why did such an apparently groundbreaking advance in the development of fusion nuclear energy result in Lockheed Martin's stock going down on Wednesday?

Well, it turns out that not everyone is buying Lockheed's story. Mother Jones magazine pointed out that past researchers have had trouble getting out more energy from nuclear fusion than they initially put in to start the reaction. University of Texas physicist Swadesh M. Mahajan was likewise skeptical, warning that "both the physics and the engineering ... are extremely, extremely daunting." In fact, Mahajan went so far as to call Lockheed Martin's announcement "poppycock," declaring he knows of "no materials that would be able to handle anywhere near that amount of heat."

Who is right?
Scientists have been trying to get fusion nuclear energy to work for decades. So if history is any guide, the critics might be right, and Lockheed Martin will ultimately end up with a bad case of scientific egg on its face.

But what if the critics are wrong?

After all, this is no fly-by-night organization. This is Lockheed Martin -- the world's largest defense contractor, the company that invented the stealth fighter jet, that is helping China and Australia harness "green" energy from the sea, and that invented an entirely new way to transform saltwater into clean drinking water through molecular filtration.

Still shot from Lockheed Martin video.

It hardly seems likely that an organization as famously secretive -- and successful -- as Lockheed Martin's hi-tech Skunk Works division would claim to have solved the fusion nuclear energy problem on a lark.

The upshot for investors
Lockheed Martin said that in 10 years, it expects to have fusion reactors powering American aircraft and warships, giving them "unlimited range" and "unlimited endurance." Ten more years will see Lockheed Martin give "clean power for the world" -- "safe," nuclear "proliferation free," and with "no emissions" of greenhouse gasses.

Even if you think it's possible that Lockheed Martin will deliver on its promise, an investor today has to think very carefully about whether he or she wants to remain invested in oil-centric companies like BP (BP 0.90%) or ExxonMobil (XOM 2.04%) -- or even other green energy firms such as First Solar (FSLR -2.10%) or SunPower (SPWR -1.15%).

"Haters" can be as skeptical as they like about Lockheed Martin's invention. But if it is everything that the company says it is, then this invention of fusion nuclear energy will truly change the world.