A
global climate push to decarbonise industries most in need of environmental remediation could turn hydrogen from a cottage sector into a behemoth with the help of government subsidies that attract investment to meet net-zero emissions targets. This revolution may provide a US$2.5 trillion investment opportunity between now and 2050 for utilities, equipment makers, and other businesses seeking to curb emission intensity. According to BloombergNEF (BNEF) annual demand growth for hydrogen could reach 7% per year, and hit 7% of global energy use by the middle of the decade. This article will take a look at which companies are best placed to benefit from this rapid growth.
Hydrogen investment to boom amid huge potential in climate fight Hydrogen is necessary for the world’s largest carbon emitters – the US, China, and Europe – to achieve their net-zero climate targets by 2050 - 2060, as the molecule can aid hard-to-abate industries to decarbonise. Investment opportunities are plenty, though subsidies are essential for the initial scale-up and to achieve cost reductions, since hydrogen production is very expensive. As a storage mechanism, hydrogen has several advantages over lithium-ion batteries, namely greater energy density. This is important, considering the need for long-term seasonal storage of intermittent renewable power and easy transportation to places where the energy is needed from sites with ample green resources. Hydrogen can also utilise most existing natural gas infrastructure, though modifications would be needed to handle large amounts.
Hydrogen investments look set to skyrocket Despite several false starts in the past decades, Bloomberg Intelligence (BI) believes that investments in hydrogen are set to surge. Between 2018 and 2020, investments averaged approximately US$1.5 billion/yr, according to BloombergNEF. This will likely increase to US$38 billion/yr between 2019 - 2040 and US$181 billion/yr from 2041 - 2070, according to International Energy Agency (IEA) projections.
50
