Over the past 6 months the market capitalization of publicly traded hydrogen focused companies have more than doubled.
What is causing this recent increase in market capitalization and share prices?
Investors continue to pour money into investments that meet environmental, social and governance (ESG) criteria.
Why are hydrogen companies considered ESG investments?
Hydrogen production and use, especially when the source of the hydrogen is Green such as hydrogen produced by electrolysers powered by renewable electricity is a zero emission source of energy.
Increased focus on reducing emissions
Consumer sentiment has shifted significantly over the past year, perhaps this is due to the distinctive change of year and decade or due us finally reacting to the alarming evidence of climate change and pollution that scientists have been pushing in front of us for years.
Whatever the reasons are, consumers have become hyper focused on environmental issues and this is causing companies to revisit their strategies to ensure that their values are closer aligned with their consumers. As a result, Green Hydrogen is now being investigated and implemented in many commercial applications that were previously overlooked such as in industry for steel production, in transport for maritime, and road transport and in energy systems as a buffer for variable renewable energy (VRE) absorbing excess electricity during overproduction and a power source during low production periods.
Reductions in Green Hydrogen production costs
Until recently, the cost to produce green hydrogen was prohibitively expensive due to expensive equipment, low efficiencies, and expensive renewable electricity prices. This is changing quickly as electrolysers used to produce hydrogen from electricity are falling in price, their efficiencies are increasing and renewable electricity is becoming more available and often cheaper due to their low or non-existent marginal production cost.
How does the future look?
Countries such as Japan and South Korea have embraced hydrogen as a fuel of the future however much of the rest of the world is still in early stages of hydrogen production and use. In Germany, a strategy is being put together to boost the momentum of hydrogen in order to help reach the 2030 goal of reducing carbon emissions by 50% as compared to 1990 levels. In Norway, the long awaited hydrogen strategy is due for release in March of this year. Meanwhile in the United States of America there is no national strategy in place but this has not stopped entrepreneurial activities such as Nikola Motors who plans to produce hydrogen semi-trucks and a robust hydrogen refueling network in the USA together with NEL Hydrogen.
We at Greensight are excited about the increasing interest and investment in the hydrogen market and it’s ability to reduce emissions across so many challenging areas.