Alternate Energy Corp. Announces New Hydrogen Initiative

Company Discloses Progress Made in Last 6 Months; AEC's New Initiative Focused on Hydrogen Injection System for Diesel Engines; Innovative Solution Improves Fuel Efficiency, Increases Horsepower and Decreases Emissions of Diesel-Powered Trucks

Alternate Energy Corp. (OTCBB: ARGY), an emerging leader in the commercialization of economically viable and environmentally responsible hydrogen solutions, updates shareholders on its progress to date.

Since AEC's announcement this past July, where it disclosed its patent applications for its process technology that produces hydrogen and a number of valuable commodity chemical by-products, the Company has been actively pursuing a number of growth initiatives.

The Company's first order of business has been to secure the necessary funding to set its production plan in motion with an investment partner that understands the industry. Over the last six months, many interested parties willing to finance the Company have been engaged and evaluated to identify the most suitable business partner that demonstrates the highest competency and commitment to the projects involved. While this process has been both resource and time consuming, AEC is now in the final stages of negotiation with its most viable financing prospect.

As previously announced, with financing complete, AEC will swiftly commence construction of its pilot plant project. In addition to the start of its pilot plant operations, AEC recently made the decision to simultaneously move forward with a complementary business that has been in development since the spring of last year.

The AEC Hydrogen Injection Process 'HIP'

Over the last seven months, AEC's research and development team has created a new product that was specifically designed to complement AEC's sale of hydrogen and commodity chemicals.

Blaine Froats, AEC's Chairman and CEO, commented, "While the production of industrial hydrogen for bulk users (such as hydrogenation) remains a lucrative business opportunity, we always felt that our quality hydrogen could be sold at a much higher price given the right application. I therefore tasked our R&D team with the objective of increasing the 'per unit value' of the hydrogen by researching applications that would support it. What they found was momentous for AEC and its shareholders."

Based on well-documented research conducted by a plethora of scientific sources, it has become a known scientific fact since the 1970s that the addition of hydrogen to internal combustion engines (ICE) offers a number of significant benefits to the operator, namely, increased fuel efficiency and horsepower alongside reduced greenhouse gases and emissions. These benefits can be attributed to the more complete combustion of the fuel when hydrogen is injected into the air/fuel mixture:

-- An increase in fuel efficiency and resultant fuel savings of up to 40%
   in certain applications (i.e. stationary gensets).  Typically, the
   introduction of hydrogen into an ICE will realize fuel savings from 10
   to 25% dependant on several factors which influence fuel economy,
   including driving habits and the condition and make of the engine.

-- A significant increase in horsepower (HP).  While some consider this to
   be a side benefit, truck drivers interviewed have expressed that the
   increase in horsepower warrants enough benefit on its own to justify the
   purchase of the unit, irrespective of fuel savings.

-- Reduced overall emissions (virtually eliminating the customary black
   smoke that is typical of diesel powered trucks and buses.):

   -- 8 to 25% reduction in Co2 Greenhouse Gas Emissions
   -- Up to 98% reduction in particulate matter
   -- Up to 98% reduction in carbon monoxide
   -- Up to 75% reduction in hydrocarbons
   -- Up to 51% reduction of nitrous oxides

In the United States, the Environmental Protection Agency (EPA) continues to phase in its emission standards legislation, based on the "Clean Air Act Amendments" of 1990, which forces the trucking and other industries to reduce emissions, alongside refiners mandated to minimize sulfur (to 15ppm) in the production of diesel by 2010. Analogous to when unleaded fuel made its debut, when these new laws begin to take effect, the price of diesel fuel will likely become more costly to the end-user.

The Company has since developed its innovative Hydrogen Injection Process (named 'HIP') for diesel engines aggressively targeting the North American heavy transport / trucking industry. In the context of increasing oil prices, because diesel fuel represents approximately a third of a trucking company's operating cost, it was decided that this industry could benefit most from fuel savings and therefore targeted as 'low-hanging-fruit.'

Currently, AEC is actively testing its hydrogen injection process 'HIP' technology on diesel generators and trucks, quickly moving to 'patent protect' its unique solution. The Company summarizes its business analysis findings below:

--  AEC projects excellent ROI for truckers (less than 6 months @ 15%
    savings), strong income and handsome profit margin for the Company.

--  Cross-comparison of its system against competitive approaches that
    predominantly employ "electrolysis" to produce hydrogen for injection has
    shown the Company's solution to be superior by all measures --
    specifically, overall lower cost and improved reliability.

--  By virtue of the unprecedented benefits and comparative lower cost of
    AEC's HIP, every trucking company owner interviewed has expressed an
    overwhelming interest in the AEC solution, with many asking to be the
    Company's first customers when the units are initially produced.

--  Next steps will include completion of product design for commercial
    release, patenting, certification, construction and sales.
    

The example provided below has been included to provide AEC's shareholders with a clearer understanding of how the Heavy Transport/Trucking industry presents a strong business opportunity to the Company.

Heavy Transport Example

Assumptions:

The average transport truck will travel about 120,000 miles per year and burn diesel fuel at the rate of one gallon per 6 miles traveled. Therefore, the average truck will consume 20,000 gallons per year of diesel fuel, and based on current prices of $3.00 per gallon, with an annual cost of approximately $60,000 per truck. Assuming AEC's hydrogen injection system attains a conservative average of 15% savings (ranging up to 26%, and 40% or more in special instances) on fuel, this would result in a $9,000 reduction in fuel expense to the trucking company.

In the case of a known fleet operation, the company spends $200,000 in fuel purchases per month or $2,400,000 per year. A 15% increase in fuel efficiency would save $360,000 annually.

The Market:

With 700,000 trucks on the road in Canada and over 20,000,000 in the United States, the trucking industry alone consumes $120 billion dollars of fuel each year. It is therefore estimated that a conservative 15% savings would amount to approximately $18 billion dollars of savings each year. If the AEC hydrogen injection process were to conservatively attract only 5% of this market, it would be able to save its trucking customers about $1 billion per year, with AEC's annual revenue projected at $400 million per year from this program.

The Competition:

While the improvement of engine efficiency via the injection of hydrogen has been a known fact for almost four decades, only two small companies have attempted to exploit its use. Since each of these companies is selling more costly and unreliable systems, AEC is confident that the opportunity to secure a significant share of the vast world market appears to be uncommonly high.

In addition to the above, AEC is also exploring the existing on-board truck generator market with its system. With emissions regulations becoming increasingly enforced by more and more states and provinces, on-board generators are replacing the driver's need to keep the truck's diesel engine running to provide electricity when not driving. AEC is now looking to improve the combined fuel efficiency of the truck's engine and on-board generator for overall greater fuel savings.

Blaine Froats summarized, "I would first like to thank our shareholders for their patience. We have some loyal shareholders who have believed in our Company since its inception and they understand that it has taken exceptional effort and time to achieve what we have to date. We are very pleased to inform our shareholders about the Company's new Hydrogen Injection Process 'HIP' development program and about the very large market opportunity that exists."

Mr. Froats added, "We see this new use of hydrogen as the ideal complement to AEC's overall business as a provider of hydrogen and valuable commodity chemical products. I want to be clear by saying that both businesses will be developed together, in unison. We will therefore continue to move forward toward building process plants that will produce hydrogen that can supply the trucking/heavy transport market, while also working towards becoming a major supplier of valuable commodity chemicals to a world market that exceeds $10 billion per year."

About Alternate Energy Corp.

Alternate Energy Corporation (AEC) is the emerging leader in the commercialization of economically viable and environmentally responsible hydrogen solutions. AEC's patent pending hydrogen production process cleverly produces pure hydrogen alongside premium commercial chemicals, all of which enjoy established global markets. The company's on-site solution offers affordable bulk hydrogen to its customers as a reliable alternative to delivered (tube trailer) hydrogen, at a significantly reduced price. AEC's patent pending process sets itself apart from all other traditional forms of hydrogen production by avoiding the use of fossil fuels, therefore not contributing to harmful greenhouse gas emissions. AEC's recently developed Hydrogen Injection Process 'HIP' adds another environmental feather to its cap, by enhancing fuel efficiency and reducing greenhouse and other polluting gases by improving gas and diesel engine combustion. AEC believes its novel technology and pioneering business model can have a revolutionary impact on a wide range of global industries. For more information go to: www.cleanwatts.com

Forward-Looking Statements:

Statements herein express management's beliefs and expectations regarding future performance and are forward-looking and involve risks and uncertainties, including, but not limited to, raising working capital and securing other financing; responding to competition and rapidly changing technology; and other risks. These risks are detailed in AEC's filings with the Securities and Exchange Commission, including Forms SB-2, 10-KSB, 10-QSB and 8-K. Actual results may differ materially from such forward-looking statements.