Hydrogen is here to stay

The recent bull run of hydrogen stocks created an enormous hype around hydrogen technology in the past months.

Some hydrogen stocks might already be strongly overvalued at the moment, and a major setback at some point in the future is very likely. The cost argument is often used to diminish the potential of hydrogen and many renowned international experts — most prominently Elon Musk — don’t believe in a hydrogen-fueled future.

Nevertheless, I am still convinced we are on the verge of a hydrogen transition. Let me explain why:

First of all, there seems to be a global policy change towards decarbonizing our societies. Lip confessions have been around for years, but 2020 marked a turning point in the global political approach to transforming our economies. The covid crisis is certainly a major trigger, why cleantech is gaining so much momentum right now. All over the world, public spending is soaring to fight the economic impact of the pandemic, and much of that money is directed to fuel the energy transition. For instance, a COVID relief package presented by the US government in December 2020 dedicated 35 billion USD to clean energy R&D programs. Canada allocates 7,8 bn. USD via its investment bank (CIB) USD to spur a sustainable recovery from the crisis.

Hydrogen was overlooked by the public debate for a long time, labeled as expensive and technically unfeasible. This has started to change in the past years, although hydrogen didn’t receive much public attention until recently. Japan, was the first major country to publish a basic hydrogen strategy in 2017, and many other countries have followed since. Some national core initiatives are listed below:

• Australia: National hydrogen strategy (11/2019)
• Austria: Development of national hydrogen strategy (03/2019)
• Canada: National hydrogen strategy (12/2020)
• Chile: National green hydrogen strategy, 5 gw by 2025/12 bn.€ (11/2020)
• Denmark: Large scale hydrogen production funding, 1,1 bn. € (06/2020)
• European Union: EU hydrogen strategy, 40 GW by 2030 (07/2020)
• Germany: National hydrogen strategy, 9 bn.€ (06/2020)
• Korea: Hydrogen economy roadmap, 15 GW by 2040 (01/2019)
• Netherlands: Government strategy on hydrogen (04/2020)
• Norway: Norwegian hydrogen strategy (06/2020)
• Saudi-Arabia: Globally largest green hydrogen facility, 5 bn. € (07/2020)
• Spain: Spanish hydrogen roadmap 4 GW by 2030 (09/2020)
• United Kingdom: 10 point plan for green industrial revolution (11/2020)

Biden’s presidency also boosts hopes for a “Green New Deal” to become reality soon, which most likely will include Hydrogen, at least to a certain extent. Another favorable development in the US was the recent electric rate deal between the Arizona public service company and Nikola motors. The deal ensures a competitive electric rate to enable the cheap production of hydrogen.

The corporate elite explores H2

Apart from the favorable developments in politics, the following issue might be even more important for the long term outlook of Hydrogen. Over the past months, I analyzed the hydrogen activities of the most important companies worldwide. The result was astonishing. As you can see in the chart below, the who’s who of the international corporate world has started with bets on hydrogen in the past years. The list spans from obvious candidates, such as Oil&Gas companies or automotive, to rather surprising companies like Coca-Cola, Amazon, or Walmart. Yes, even Apple is on board. The company owns a patent for a fuel cell technology that might power MacBooks in the future. Also, this overview is not even close to being complete. I didn’t include any companies, who’s hydrogen activities so far are restricted to joining any form of hydrogen association. Secondly, a huge number of small and medium-sized enterprises are not included in the list. Thirdly, I have probably missed the hydrogen activities of some global corporates, which are missing from this list.

It is the sheer number of political & corporate initiatives, which distinguish hydrogen from other “sustainability” hypes — such as biofuels.

So what are the most promising sectors for Hydrogen? H2 might not conquer the global market for passenger cars, as battery-electric vehicles might be the more economic and sustainable solution for cars, but there are so many other areas, in which hydrogen poses major advantages.

Power to gas concepts will help to realize sustainable energy security around the globe. Hydrogen can easily be stored and distributed globally, therefore, it can be utilized as a reliable energy carrier for renewable electricity. Furthermore, it is a promising fuel for large-scale applications, such as steelmaking or maritime transport. Hydrogen might change the structure of the energy industry significantly. Early initiatives, such as c2pat, H2RES, or the NortH2 project indicate a deeper collaboration across different industries. An exciting and versatile h2 future awaits us, with huge business potentials on both, regional and global levels.

2020 witnessed an exponential growth of global hydrogen activities, both public and private. The first days of 2021 seem to indicate, that this trend will even accelerate in 2021. As the global race for hydrogen is underway, countries and corporates desperately try to position themselves as pioneers in the emerging hydrogen economy.

Disclaimer: We assume no liability for its accuracy, completeness, or timeliness. All content published by delphi data labs is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.