Hydrogen stands out as an energy source that produces no greenhouse gases when burned. Its only byproduct is water vapor, making it a far cleaner alternative to fossil fuels like coal, oil, and natural gas. However, hydrogen’s main drawback is that it isn’t easily found in a form that can be directly extracted. While it can be produced through various methods, most of these processes still emit greenhouse gases. Additionally, hydrogen is not yet produced at the scale necessary for it to be cost-competitive with fossil fuels.
This, however, could soon change. Several companies are working towards unlocking the massive potential of this near-zero-emission fuel.
Investing in Hydrogen: Key Insights
Hydrogen can be produced in several ways, with some methods leading to carbon dioxide emissions. For instance, when hydrogen is generated from burning natural gas, it’s referred to as “blue hydrogen.” This method requires carbon capture and storage (CCS) to capture and sequester the emitted carbon dioxide underground, reducing greenhouse gas emissions.
Another approach uses renewable energy to power an electrolyzer that separates hydrogen from water. This results in “green hydrogen,” a production method with zero carbon emissions. Both green and blue hydrogen represent different production methods categorized by their emissions profiles.
Hydrogen fuel cells, which operate similarly to batteries, generate electricity via an electrochemical reaction. Unlike traditional batteries that need recharging, hydrogen fuel cells are refueled with more hydrogen. These fuel cells have the potential to power a wide range of vehicles, including cars, trains, buses, trucks, and even maritime vessels, and they can serve as a stationary power source.
Hydrogen’s Future as a Replacement for Natural Gas
Advocates suggest that hydrogen could replace natural gas in our existing pipeline systems with some modifications. It could be used to power electricity plants and even as a fuel source for residential heating. Given hydrogen’s potential, some forecasts estimate that the global clean hydrogen market could be valued at up to $11 trillion in the future.
Despite its promise, producing clean hydrogen is still expensive. The cost to produce hydrogen from natural gas is approximately $1.50 per kilogram, while producing clean hydrogen costs about $5 per kilogram. The U.S. Department of Energy has set a goal to reduce the cost of clean hydrogen to $1 per kilogram over the next decade, making it a more viable competitor to fossil fuels.
Top Hydrogen Stocks to Watch in 2024
Given the bright future of clean hydrogen, an increasing number of companies are investing in this sector. While many energy and industrial companies are just starting to explore hydrogen’s potential, a few are already emerging as leaders. Below are some of the top hydrogen companies to watch as the industry progresses:
Air Products
Air Products (APD) is a global leader in supplying industrial gases and liquefied natural gas (LNG) processing technology. With more than 100 hydrogen plants worldwide, the company has the capacity to produce 7 million kilograms of hydrogen daily.
Air Products is investing heavily in clean hydrogen projects, including a $4.5 billion initiative to build the world’s largest blue hydrogen facility in Louisiana, which is expected to be completed by 2026. This project will sequester over 5 million metric tons of carbon dioxide per year, solidifying Air Products’ position as a leader in the clean hydrogen space.
BP
BP (BP) is transitioning from its roots as an oil and gas producer into a leader in low-carbon energy solutions. Hydrogen plays a key role in BP’s strategy, with plans to capture 10% of the hydrogen market in its core regions. BP is currently advancing major hydrogen projects across the UK, Europe, the U.S., and Australia.
In the UK, BP is developing both a blue hydrogen facility (H2Tesside) and a green hydrogen facility (HyGreen Tesside). These projects aim to meet 15% of the UK’s 2030 low-carbon hydrogen production target.
Plug Power
Plug Power (PLUG) is a pioneer in hydrogen fuel cell technology. The company has deployed more than 69,000 fuel cell systems for the e-mobility market and operates over 250 hydrogen refueling stations across North America.
Plug Power is building a green hydrogen network to produce, store, and distribute hydrogen across North America and Europe. The company is targeting revenue growth from $1 billion in 2023 to $20 billion by 2030, positioning it as a leading player in the hydrogen sector.
Bloom Energy
Bloom Energy (BE) has developed the Bloom Energy Server, a platform for electric power generation. The company has also created the Bloom Electrolyzer, which can produce clean hydrogen 15% to 45% more efficiently than other systems on the market. Bloom Energy aims to help heavy industries like steel and chemicals decarbonize with its technology.
Linde
Linde (LIN) is advancing technologies to compress and safely refuel hydrogen while reducing carbon emissions through CCS. The company is investing $1.8 billion in a blue ammonia plant in Texas and has partnered with ExxonMobil to permanently store the captured carbon dioxide. Linde expects the project to begin operations by 2025.
The Promise of Hydrogen as an Alternative Fuel
Hydrogen is one of the most promising clean energy sources. It has the potential to decarbonize industries, replace natural gas, and store renewable energy, offering a pathway to a net-zero emissions world. However, the industry must scale up and bring costs down to compete with fossil fuels and other emerging technologies.
Hydrogen stocks hold significant potential. The global hydrogen industry is poised for growth, and the fuel could one day replace natural gas for residential, commercial, and industrial purposes. Additionally, hydrogen could become a key low-carbon fuel for the transportation industry. If hydrogen reaches its potential, companies in the sector could see substantial revenue and profit growth, driving their stock prices higher.
Reference : Matthew DiLallo