Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Making hydrogen was always one of the most boring science experiments in high school.

We’d attach paper clips to a nine-volt battery, creating a makeshift anode and cathode, submerge the clips in a cup of water and watch hydrogen bubbles form as electric current passed through the liquid. The only remotely interesting tidbit about the experiment was learning that hydrogen is highly flammable and torched the Hindenburg in 1937, an image that still haunts the pages of disaster chronicles.

Scroll forward a few decades and hydrogen is the hot new commodity, the talk of the energy and investment markets, the saviour of our carbon-clogged planet.

Story continues below advertisement

Stories about hydrogen have migrated from the nerd press to the mainstream media, and hydrogen-related companies have hit the market with dot-com-like enthusiasm. Governments everywhere are putting hydrogen, which emits no carbon when it’s burned, at the centre of their net-zero emission goals. We might not see hydrogen-filled zeppelins again, but we will see hydrogen-powered cars and ships and industrial processes such as steelmaking and cement production.

The hydrogen economy is coming – there’s no doubt. But there is no hydrogen revolution. Ignore the hype – it’s a slow burn, and the hydrogen we now produce is dirty. It is part of the problem, not the solution. Investors should nonetheless pay attention, because slow burns can produce money-making opportunities. A cleaned-up hydrogen value chain will have to be built.

First, a little reality check.

As a fuel, hydrogen was used to power the first internal combustion engine 200 years ago. It was also used as rocket fuel for the Apollo moon shots in the 1960s. Then it more or less vanished – endless cheap oil ensured its fringe status.

Today, hydrogen is made in pretty big quantities for ammonia-based fertilizers and other industrial products through a process called electrolysis, which splits water into hydrogen and oxygen. Too bad all but 0.2 per cent, or less than 100,000 tonnes a year, is so-called green hydrogen. The electricity needed to produce green hydrogen comes from renewable sources, such as hydroelectric, wind and solar power.

Almost all the rest is grey hydrogen, which means the power to produce it comes from burning hydrocarbons – coal and natural gas. The International Energy Agency says hydrogen production spews out 830 million tonnes of carbon dioxide a year, equivalent to the combined emissions of Britain and Indonesia. The point being, green hydrogen has to replace grey hydrogen if we are to meet net-zero goals.

But how? Ambienta, an Italian ESG fund that has built a thick file on the hydrogen industry, thinks that effort will happen at a slow pace. “The technology is available but it’s not economically viable,” said Fabio Ranghino, Ambienta’s head of strategy and sustainability.

Story continues below advertisement

In a report, the fund said turning the current 70 million tonnes of annual hydrogen production from grey to green would require an 8,000-fold increase in the collective capacity of electrolyzers, the systems that break water into hydrogen and oxygen. Powering those electrolyzers would require massive increases in renewable power, since every kilogram of green hydrogen requires 50 kilowatt hours of electricity.

Ambienta calculated the electrolyzers would consume the equivalent of all the world’s installed renewable energy capacity. The calculation assumes that current green hydrogen production will remain static. Were it to go to 400 million tonnes a year to clean up the steel, cement, aviation and shipping industries, global renewable energy capacity would have to rise eightfold.

The tab would be many trillions of dollars, and building such capacity might meet enormous political resistance, even if governments today dream of a hydrogen economy. Blanketing the planet with solar panels and wind farms and plugging every river with dams for hydroelectric power to provide green hydrogen to a few industries such as steel and cement might not sit well with the rest of the business world. Tesla, for instance, might want some of that juice to charge its cars.

The slow and expensive pace of scaling up green hydrogen capacity does not mean investment opportunities will be scarce; it just means that fossil fuels will continue to dominate hydrogen production for many years, decades even. For investors, the trick will be to find companies that will try to shorten grey hydrogen’s lifespan.

Hundreds of private and public companies are picking their spots in the green hydrogen value chain. Renewable energy companies will certainly benefit over the long term. So will ones that will build hydrogen infrastructure and power generation.

One of them is Ceres Power, a British company that makes fuel cells. Ceres has captured the imagination of some ESG funds, and its shares have climbed 280 per cent in the past year, taking its market value to £2.1-billion. Another stock market star is Norway’s Nel, which makes systems to produce, store and distribute green hydrogen.

Story continues below advertisement

Industrial gas companies such as Linde and Air Liquide are moving into the hydrogen game. And for Canadian investors, fuel cell pioneer Ballard Power is very much alive and well. Its shares have almost doubled in the past year. Spotting the winners will be difficult, all the more so because the green hydrogen economy’s rollout will be a lot slower than advertised.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies