Hydrogen has held the attention of countries and energy investors who see investment opportunities and this has been forecasted to provide a significant boost for renewable energy, the scaling of which lowers hydrogen production costs further.
To date, of the 70 million metric tonnes of hydrogen produced globally per year, only 4 percent is generated from renewable energy according to the World Energy Council.
Nevertheless, three months ago, the European Union set out its new hydrogen strategy as part of its goal to achieve carbon neutrality for all its industries by 2050.
This presents a big win for the hydrogen sector argues Alex Kimani, a veteran finance writer, investor, engineer and researcher for Safehaven.com.
“Natural gas is surely a cleaner fossil fuel but hydrogen is coming with a big bang too. Japan may soon become energy independent on hydrogen,”tony Attah, MD/CEO, Nigeria LNG Limited said at the recent Businessday’s Energy Series 2020.
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The EU has outlined an extremely ambitious target to build out at least 40 gigawatts of electrolyzers within its borders by 2030, or 160 times the current global capacity of 250MW. The EU also plans to support the development of another 40 gigawatts of green hydrogen in nearby countries that can export to the region by the same date.
The big deal is that the regional bloc intends to have 6GW of green hydrogen produced from renewable energy up and running by 2024.
According to BNP Paribas Asset Management’s Lewis, developing these green hydrogen commitments will require about $400 billion, fully half of which will go to developing new renewable energy capacity, thus increasing the growth opportunity of a sector that’s already red-hot.
That is a $200 billion boost for the global renewable sector or nearly 4 times the EU’S approximately $55 billion investments in clean energy in 2019.
A lot of that hydrogen is probably going to be used to decarbonise the mobility sector, giving electric vehicle (EV) investors some serious food for thought.
Green hydrogen is currently the most expensive hydrogen source, with grey hydrogen produced from fossil fuels via Steam Methane Reforming (SMR) and coal gasification the cheapest. But the EU does not seem bothered with costs at the moment, with its main goal being to become carbon neutral by 2050.
Wall Street has lately been bubbling with bold bullish projections and some bearish ones too about the renewable energy sector. Solar stocks have especially been shooting the lights out as a Biden presidency is increasingly being viewed as a big win for clean energy.
Wall Street is also taking hydrogen seriously. From pariah that was burdened with too many challenges to become a practical energy source during our lifetimes, suddenly even giant utilities such as Nextera Energy (NYSE:NEE) and Dominion Energy (NYSE:D) have charted highly ambitious hydrogen roadmaps.
Bank of America says hydrogen could supply the world’s vast energy needs, fuel cars, heat homes, and also help to fight climate change. BAC says “we have reached the tipping point of harnessing this element effectively and economically” and predicts the hydrogen marketplace to reach a staggering $11 trillion by 2050.
Mark Lewis, the chief sustainability strategist at BNP Paribas Asset Management, has told CNBC that the development of green energy will create the biggest investment opportunities for renewables and not hydrogen infrastructure.
Scores of global energy heavyweights, including BP, Siemens Energy, Repsol, and Orsted have already outlined their green hydrogen strategies.
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