An internal combustion rotary engine comprising: a stator including an inner surface defining an asymmetrical oval-shaped radial stator cavity with a semi-oval axially-shaped cavity surface including an intake zone, a compression zone, an expansion zone and an exhaust zone; a radially round rotor with a semi-oval axial rotor outer surface that is radially rotatable within the center of the oval-shaped radial cavity, and a plurality of combustion cavities and a plurality of slots located along the radial periphery of the rotor; and a plurality of radially protruding and movable vanes disposed within the rotor slots and extending to and engaging the inner surface of the oval-shaped radial stator and semi-oval axial surface, so as to form a plurality of rotatable chambers within which a mixture of fuel including hydrogen is compressed for ignition in the plurality of rotor combustion cavities; a vapor chamber overlying a portion of the combustion and expansion zones of the oval-shaped cavity and including a fluid for absorbing heat from the ignition of the fuel mixture and combustion in the rotor combustion cavities and returning heat back to the rotor combustion cavities as they rotate through the expansion zone; and an active water cooling system for protecting the rotary engine from excess heat, the cooling system provided in the stator and in the plurality of vanes and the cooling system further comprising a cooling/heat transfer system located within the rotor; wherein the active water cooling system and the vapor chamber transfer heat to and from each other, thereby allowing a large portion of heat produced by the rotary engine's combustion of the fuel mixture to be continually transferred back through the rotary engine to provide positive exergy work benefit. a stator including an inner surface defining an asymmetrical oval-shaped radial stator cavity with a semi-oval axially-shaped cavity surface including an intake zone, a compression zone, an expansion zone and an exhaust zone; a radially round rotor with a semi-oval axial rotor outer surface that is radially rotatable within the center of the oval-shaped radial cavity, and a plurality of combustion cavities and a plurality of slots located along the radial periphery of the rotor; and a plurality of radially protruding and movable vanes disposed within the rotor slots and extending to and engaging the inner surface of the oval-shaped radial stator and semi-oval axial surface, so as to form a plurality of rotatable chambers within which a mixture of fuel including hydrogen is compressed for ignition in the plurality of rotor combustion cavities; a vapor chamber overlying a portion of the combustion and expansion zones of the oval-shaped cavity and including a fluid for absorbing heat from the ignition of the fuel mixture and combustion in the rotor combustion cavities and returning heat back to the rotor combustion cavities as they rotate through the expansion zone; and an active water cooling system for protecting the rotary engine from excess heat, the cooling system provided in the stator and in the plurality of vanes and the cooling system further comprising a cooling/heat transfer system located within the rotor; wherein the active water cooling system and the vapor chamber transfer heat to and from each other, thereby allowing a large portion of heat produced by the rotary engine's combustion of the fuel mixture to be continually transferred back through the rotary engine to provide positive exergy work benefit.