NATIONAL HARBOR, Md.—Lithium spontaneously combusts in air, yet the battery in your computer—and any of the stacks in the new breed of electric vehicles—is made from it. Lithium even burns in water, which is too bad because a lithium-water battery could be both cheap and powerful. Now battery-maker PolyPlus claims to have created such a battery by encasing the lithium in a special membrane that allows it to pass charge without melting down.

"Lithium is explosive in water," Arun Majumdar, director of the Advanced Research Projects Agency–Energy, or ARPA–e, which is funding PolyPlus's development effort, noted at the agency's second annual conference March 1. By ensconcing the lithium inside the membrane's seal, the PolyPlus battery reacts safely with the oxygen dissolved in the water and delivers as much as 1,300 watt-hours per kilogram of electricity. "This is like a fish, but it's a battery."

PolyPlus is just one of several better battery-makers that ARPA–e is funding, all attempting to improve on a standard lithium ion battery's roughly 400 watt-hours per kilogram—the reason why all-electric cars don't have the long-distance range of a traditional automobile. The program—dubbed BEEST, for Batteries for Electrical Energy Storage in Transportation—has funded 10 projects in all, ranging from rechargeable batteries composed entirely of solid materials to high-energy density capacitors. "Just like 'Intel inside', I hope you have BEEST inside your electric cars in the future," Majumdar said.

Reinventing the battery is the only way available today to both reduce oil consumption and bring manufacturing jobs back to the U.S., Secretary of Energy Steven Chu told conference attendees. John Goodenough at The University of Texas at Austin invented the lithium ion battery in use today—but Japanese and Korean companies now produce the most globally. "Just because we lost the lead doesn't mean we can't get it back," Chu said, referencing battery technology from Argonne National Laboratory in Illinois now being licensed by General Motors and LG.

Even in the absence of better batteries, GM and other car companies are putting electric vehicles on the streets in 2011—including both a Chevy Volt and a plug-in Toyota Prius parked on the conference floor here in Maryland. Best Buy's Geek Squad is preparing to roll out a program to help customers install home charging stations, the consumer retail chain's director of emerging business, Chad Bell, told conference attendees. And companies such as Fed Ex are purchasing fleets of electric delivery vans. "The nation's dependence on imported petroleum cannot be sustained over the long term," said FedEx Founder and CEO Fred Smith in a video address to the ARPA–e conference. "The federal government has to fund basic research on new technologies that have significant effects on the country's competitiveness."

PolyPlus's battery may be just that: Dip the encapsulated lithium pack into a glass of ordinary water and it produces current that lights up an LED display at the company's conference showcase booth. And many companies are working on improving today's lithium ion batteries, which will still be around for a long time as price continues to drop, argued Yet-Ming Chiang, chief scientist at battery-maker 24M and formerly of A123. "There is a lot of headroom in lithium ion battery technology," he said.

Ultimately, better batteries—or finding a way to keep lithium from combusting in air, like PolyPlus and the Missouri University of Science and Technology are trying to do—can result in reducing the demand for imported oil that sends $1 billion per day abroad, largely to Canada, Middle Eastern countries and Venezuela. "Our national security is very dependent on energy security," Chu noted. "Energy we create at home is wealth creation at home."