Yesterday’s announcement by Apple that it is recalling more than one million lithium-ion laptop batteries sold in the U.S. is again throwing the spotlight on the safety of this battery chemistry.

Lithium-ion batteries are widely used in laptops, cell phones, and other mobile devices because of their ability to store lots of energy in a small, light package. But with a recent spate of incidents in which these batteries overheated or burst into flames – prompting recalls of Sony batteries in Apple computers and more than four million Dell laptops – many experts are questioning their safety.

A solution may be at hand, although it could mean accepting, for now at least, lower battery capacity. Safer materials for lithium-ion batteries already exist and are available in products such as power tools. With some modification, they could be used in laptops, and also help facilitate the widespread use of lithium-ion batteries in hybrid and electric vehicles.

Leading the way are two companies, A123Systems of Watertown, MA, and Valence Technology of Austin, Texas, which have designed lithium-ion batteries that avoid the traditional positive electrode materials used in most laptops and cell phones today.

According to Yet-Ming Chiang, materials science and engineering professor at MIT and a founder of A123, the cobalt-oxide or related oxide materials typically used in lithium-ion batteries become unstable if overcharged or overheated, which can happen in the case of battery damage or a fault in the manufacturing process that leads to an internal short. The unstable materials release oxygen, oxidizing other materials in the battery, which in turn produces more heat. The cycle continues in a process called “thermal runaway,” which in some cases can lead to a violent explosion (see “Are Lithium-Ion Electric Cars Safe?”).

In the new lithium-ion batteries, cobalt oxide is replaced with iron phosphate, a much more stable material. Indeed, a traditional lithium-ion battery will burst into flames in abuse tests, such as being pierced by a nail (see this A123 and this Valence video). But the new materials show little reaction at all.

The downside of batteries using the new material is that they have less energy capacity than those typically used in laptops today. A123’s batteries, for instance, have been engineered for applications in which safety and quick bursts of power are more important, such as for power tools. This power comes partly from the nature of the material; however, making the electrodes thin also helps. So engineering batteries with thicker electrodes can increase capacity.

Although safer lithium-ion batteries could be adapted for mobile devices, a re-engineered battery would still have less runtime than users now expect in their laptops and cell phones. The lower capacity, however, can be offset, to some extent, especially in cell phones, by faster charging times made possible by the new chemistry, says A123 founder and VP of business development Ric Fulop. Although the battery would be exhausted faster, it could be recharged during a break in a meeting or at a layover in an airport. Fulop says their batteries also maintain capacity over more charge/discharge cycles, extending their useful life.

Currently, A123 is focused on power tool and hybrid vehicle markets, where high power is essential. But Valence, whose batteries run the Segway personal transport vehicle, has been talking to laptop manufacturers about adapting laptops to use their batteries, says vice president of marketing Dean Bogues. So far, however, computer makers haven’t taken the bait. “The hurdle they’ve had is, who’s going to be the first to give up energy capacity to go with a safer technology?”

With the recent headline news of massive recalls and continuing worries over the safety of more traditional lithium-ion batteries, though, some may begin to change their thinking.