At first, I wasn't too keen on analyzing FuelCell Energy's (NASDAQ:FCEL) third-quarter conference call. I basically agree with fellow Fool Stephen Ellis' assessment of the company's latest results: "Investors are in for a long wait. This Fool isn't that patient."

Then again, part of me really wants to see alternative-energy firms such as FuelCell, Ballard Power (NASDAQ:BLDP), Energy Conversion Devices (NASDAQ:ENER), and Plug Power (NASDAQ:PLUG) succeed. I can't dismiss the promise that cleaner, more fuel-efficient energy might reduce our reliance on ExxonMobil (NYSE:XOM) and other traditional energy suppliers. I also believe that we as investors need to support more firms that could conceivably benefit society as a whole, rather than simply boosting our own bottom lines. Super-clean and ultra-efficient energy is an important step toward a better future for everyone.

That's why I'm thrilled to see automotive manufacturers including Toyota (NYSE:TM) and General Motors (NYSE:GM) sell hybrid vehicles, even at an initial loss. It's also why I'm not too worried about FuelCell's bottom-line losses ... yet. Compared to giving up on cleaner fuel altogether, I think those losses are a smaller price to pay in the long run.

So with renewed enthusiasm, this edition of Fool On Call will investigate FuelCell's most recent conference call, focusing our attention on increased adoption possibilities. We'll focus in particular on three markets: California, Japan, and the U.S. government.

Arnold's state leads the way
I can't help chuckling at the thought of the Governator, Arnold Schwarzenegger, driving around in an urban assault vehicle -- err, I mean, Hummer -- in a state that often leads the nation in clean-energy legislation. For many Californians, it seems that the notion of filling up four times on the way to the local grocer is neither economical nor ethical. Last week, California adopted what FuelCell CEO Dan Brdar described as "the country's most sweeping regulation to limit carbon dioxide emissions."

The new regulations call for a "25% reduction in greenhouse gases from electric power plants and other sources by the year 2020." That's good news for FuelCell and its DirectFuel Cell (DFC) hydrogen power plants. Already, 30% of the company's global installations are situated in this state. Following this legislation, that figure should increase.

Japan and the Kyoto Protocol
FuelCell hopes that progressive legislation out of California will set a trend for emissions standards in other states. On a global scale, the company has similar aspirations for Japan.

As a signer and primary advocator for the Kyoto Protocol, Japan is making a serious commitment to significantly reduce carbon dioxide emissions. These standards, in conjunction with higher fuel costs, are driving Japanese businesses toward alternative energy sources. During the conference call, executives noted that telecommunications giant NTT has installed a DFC power plant in Sendai City in northeastern Japan.

While sales in the region have been challenging, the company believes "the stage is set for improved conditions." Management pointed toward a renewed agreement with its distribution partner in the region as one sign that things may be looking up.

Uncle Sam wants a piece of the action
The U.S. government has yet to jump on the Kyoto bandwagon, but that doesn't mean it lacks interest in FuelCell's technology. In the third quarter, the company won a research and development contract from the U.S. Department of Defense to further develop the "process for generating pure hydrogen" based on the company's "carbonate fuel cell technology." Wondering why the DoD is interested in alternative-energy technology? Look no further than the last few years' events in the Middle East.

Beyond this project, FuelCell was also awarded additional funding from the Office of Naval Research. The U.S. Navy likes the idea of placing these power supplies on ships; since DFCs have no moving parts, they could conceivably improve the stealth capabilities of the Navy's vessels.

Less green now, more green later
Unfortunately, FuelCell's nowhere near profitable yet. Unless its technology is more quickly and widely adopted, the company will have difficulty reducing its current manufacturing costs. Management hopes that California, Japan, and the federal government will get the ball rolling toward profitability.

I wouldn't advise putting any more than a small percentage of any portfolio into an investment like this -- the current risks are just too great. But all the same, there are valid reasons to be excited about FuelCell's possibilities. Consider the story of a California-based company called Gills Onions, as discussed in the Q&A portion of the call. The fresh-produce producer recently purchased a DFC power plant; where it once had to pay to dispose of onion peel waste, Gills can now use an aerobic digester to convert that waste into biogas, which in turn becomes fuel for the DFC.

Gills Onions not only reduces costs associated with waste disposal, but it also employs a clean and efficient power source. And as progressive companies like Gills Onions save, so do we all . moving Earth's bottom line one step further away from bankruptcy.

More fuelish chatter:

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Fool contributor Jeremy MacNealy completed graduate work in ethics at Princeton Theological Seminary and is now taking on a research project at Duke University on the topic of reframing ethical and legal frameworks to further promote social responsibility among corporations. He has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.