Hydrogen Stocks – What You Need To Know About The Sector

Hydrogen use today is dominated by industry – in particular, its utilisation in the oil refining process and ammonia, methanol and steel production. The majority of hydrogen today is supplied by the fossil fuel industry, predominately via a process of heating natural gas with ultra-high-temperature steam.

It is not the current utility, but the possibilities in the extraction and application of hydrogen that has everyone in the CO2 emission reduction bracket excited. Hydrogen is a virtually unlimited resource that can be extracted via the electrolysis of water and if the power supply is renewable, the emissions post installation of infrastructure is virtually zero.

As the costs come down for wind and solar, a number of players are looking to profit from the vast possibilities of this sector and provide clean and renewable fuel to households, industry, and the transportation sector.

Hydrogen Extraction and Application

Hydrogen extraction and application have their foundation in a number of high-CO2-emitting industries. As a feedstock used to lower the sulphur content of fuels, and used in ammonia production, hydrogen has long been applied to energy-intensive chemical processes.

There is a multitude of ways to extract hydrogen from the air, water and ground. The most common and cheapest way currently is to apply steam to natural gas extracted from the ground. To a lesser extent, similar applications on processed coal are found in heavy industry.

Lower carbon-emitting extraction methods can be found in nuclear processes or lessening the impact of fossil fuel extraction via storing the CO2 produced in the ground. The wide array of production methods has given rise to a rainbow of colour coding to represent the various ways to extract hydrogen. There are nine in total.

The most common method today is grey hydrogen – fossil fuel reforming via steam. Blue is the sequestering and storing of carbon emissions from the grey method and is attracting investment from refiners sitting on legacy assets.

Green is the supposed cleanest method and applies a current from renewable power generation to the electrolysis of water in order to split the hydrogen and oxygen molecules. Green hydrogen is widely seen as the most preferred from a policymaker’s perspective, and as a result, is attracting the bulk of the new investment.

Once derived from the water, the hydrogen can be routed into existing industrial processes or into the expanding fuel cell market. Fuel cells are a rebinding of the hydrogen and water molecules via a catalyst, generating an electrical current.

Fuel cells though less efficient than batteries, at scale are able to compete and offer potential to heavy machinery looking for a long-lasting and long-range consistent energy source.

In certain corners, such as the North West of Australia, green hydrogen is gathering attention due to the ready availability of year-round solar energy and the close proximity of a wide variety of heavy machinery operating in iron ore extraction that could benefit from the steady power output of a fuel cell.

Why Invest In Hydrogen Companies?

As the cost of solar and wind comes down, the cost of hydrogen production is sure to follow suit and make the fuel cell infrastructure reliant on hydrogen more competitive in price.

There is a wide-ranging suite of applications of fuel cells in the power generation and transportation sector, with heavy industry gaining the most traction at this early stage.

The strategy of hydrogen and fuel cell adoption is a key component of the global CO2 emission reduction climate goals and will continue to attract investment for years to come.

According to the IEA, by 2030, up to 6 million fuel cells could be deployed, a large marketplace and revenue opportunity for those hydrogen companies currently listed on global stock markets. Below you can find a list of various companies in the sector from around the globe, all with some stake in the niches of the hydrogen market.

What To Know Before Investing In Hydrogen Companies

Hydrogen infrastructure and fuel cell power generation are still in their infancy. Currently, the technology is not as competitive in price as other renewable energy sources and is behind the lagging battery in the transportation sector.

There is an inherent risk in any investment and the hydrogen sector is no different. The stated opportunity is there, but it is a long road to scaling, price competitiveness, and implementation. You should always perform due diligence and be comfortable with the level of risk you are taking on when making any investment.

Asktraders has a wealth of quantitative and qualitative tools, as well as in-depth market coverage to keep investors up to date with the hydrogen market and a wide range of related sectors. Performing due diligence is an essential step to take before making any investment.