Kill or cure: the smallest help must wait till we've conquered our fear of grey goo

Having promised to revolutionise everything from skincare to space travel, nanotechnology is finally coming to terms with the practicalities of bringing science fiction into the real world. As technology so small the eye cannot see it makes its way into commercial products, companies are facing up to a host of legal, ethical and public relations challenges that could determine the shape of the sector for years to come.

Prince Charles recently came out against nanotechnology - voicing fears of the risks presented by "grey goo", self-replicating nano-robots that threaten to eat the world - and those behind the new industry fear it could be mired in the same issues that hit the development of genetically modified products.

A discipline that focuses on objects measured in billionths of a metre, nanotechnology promises to deliver spectacular advances in almost every aspect of life, from manufacturing to healthcare. By manipulating material at a level a thousand of times smaller than a red blood cell, it's already possible to make stronger yet lighter products. Ultimately, devices and electronics could transform medical care. With applications in both the civil and military sphere, the global market is expected to reach $1,000bn (£570bn) over the next decade.

But fears continue to grow about the risks to human health and the environment. Nanoparticles have been absorbed by liver cells, setting the stage for huge leaps in medical science: but the flipside is that they can potentially be absorbed by bacteria too, allowing them to enter the food chain. Just as worryingly, a study in the US last year showed that fish exposed to synthetic carbon molecules developed brain damage 17 times faster than normal. And carbon nanotubes, which are vastly stronger than steel, have a similar profile to asbestos fibre, and might have an equally devastating effect if released into the environment and absorbed by our bodies.

The Nanoethics Group, a US research organisation, points to a number of other potential dangers. If these amazingly strong nanomaterials are not biodegradable, will they become as long-lasting a pollutant as nuclear waste? How will individuals and organisations protect their privacy in a world where nano-sized listening devices are undetectable? And from a security perspective, what happens if undemocratic countries make breakthroughs in nanotechnology that threaten the West? Or what if terrorists get hold of weapons that can create "new, unimaginable forms of torture - disassembling a person at the molecular level or worse"?

All these issues were aired recently at the International Congress of Nanotechnology in San Francisco. But delegates found that it's all but impossible to answer many of these questions today. Few toxicology tests have been carried out in the nanotechnology field, and the risks cannot be fully assessed as we don't yet know how pervasive nanoparticles will become. Despite that, many in the commercial world are pushing products on to the market. "An estimated 475 products containing invisible, unregulated and unlabelled nano-scale particles are already commercially available (including food products, pesticides, cosmetics, sunscreens and more) - and thousands more are in the pipeline," says ETC Group, a Canadian pressure group.

At heart, the ethical debate is whether nanotechnology research and development should continue before its impact is fully understood. As Patrick Lin, the research director of the Nanoethics Group, points out, the debate partly centres on interpretation of the scientific "Precautionary Principle", which argues that if you're not sure of the outcome of a project and there's a danger that it may be catastrophic, the prudent move is not to push ahead. Many pressure groups follow that line: ETC Group, for example, has called for a moratorium on research and commercial products until the technology is proved safe.

If some degree of risk is accepted, however, the ethical dilemmas become complex. Professor Deb Bennett-Woods from Regis University in Denver, Colorado, points to fundamental questions about whether research should be publicly funded, and whether knowledge gained from military research should be transferred to the private sector. Issues such as privacy also need to be taken in the context of changing public expectations, which have already shifted in the face of global security concerns.

"Just because something has a potential to reduce our privacy, it is not necessarily 'bad'," says Dr Lin. "We need to weigh the benefits of that technology (eg nanosensors that protect us by sniffing out minute traces of biochemicals) or competing interests (eg safety)."

As the subtleties begin to play out, more public and private bodies are getting involved. The European Commission's latest advisory group on ethics in science, for example, has made its first task to examine the ethical issues of nanomedicine research.

For the commercial world, this debate is more likely to be viewed from the perspective of public opinion rather than ethical absolutes. With memories of the backlash against GM foods still fresh in everyone's mind, there's a feeling that the nanotechnology sector has to start doing a far better job of explaining the benefits and risks to the wider public.

"That's one of the lessons from the GM debacle. This is not just a scientific issue," says Dr Peter Singer, the director of the Joint Centre for Bioethics at the University of Toronto. "Half of it is toxicology, and half is communications." He argues for a concerted awareness campaign, from putting nanotechnology science and ethics on to the school curriculum to influencing media perceptions.

Larry Gibbs, the associate vice-provost in environmental health and safety at Stanford University in California, believes that perceptions of risk could have a bigger commercial impact than the real risks of nanotechnology. "Once an opinion becomes established, it's difficult and costly to persuade people to the contrary," he says. At the San Francisco congress, he argued that the sector has to face the fact that public perception of risk is different from professional assessments. Industry tends to focus on quantitative issues such as the risk of harming or killing people: public perception, however, is both rational and emotional and takes account of threats to what we value. As a result, there can be a higher level of public outrage over things that, in reality, are low risk, than over proven high risks (like smoking).

"The risks that harm or kill people and the risks that upset people are often completely different," Mr Gibbs says.

These practical and ethical issues are not going to go away soon. If anything they'll get more complex. Dr Singer says that while there are pressing short-term issues to understand the environmental health and safety risks of nanotechnology, in the long term he believes the issues are part of the broader "North to South" debate. With average life expectancy in Britain twice as long as in parts of Africa, he argues that the "mother of all challenges" is to use nanotechnology to help the developing world, such as in tackling malaria that kills hundreds of millions of people. He adds out that some developing countries have already made significant innovations in this field, including states with strong technology reputations such as India and China, as well as Thailand and Argentina. Best practices need to be replicated: "The end game is to have innovation in developing countries themselves," he says.

GM's promotion in the developing world became a fraught ethical issue. Can the makers of what Prince Charles fears may become "grey goo" convince us of its safety before fear overcomes any benefits?