Subsectors | Hydrogen Economy

  • The “Hydrogen Economy” (HE) refers to the use of hydrogen (H2) as a low-carbon fuel, particularly for heat and fuel cell EVs, as well as a means for seasonal energy storage and long distance energy transport
  •  The HE idea is not new (1970’s oil shock, 1990s, mid-2000s) but seems to be “different this time” as various supporting drivers are aligned
  • HE interest revolves around “blue” (H2 + CCS) and “green” hydrogen, which represent both opposing camps and potential allies in the transition to a HE
  • Fundamental HE technology has finally reached pre-commercialisation phase, but significant effort is still required to drive the cost curve as well as build out the broader HE ecosystem – this is leading to an explosion in innovation and start-ups
  • H2 has the potential to penetrate many different end-sectors, with Transport (the competitiveness of battery EVs notwithstanding) and Industrial Heat seem as the most promising in the medium-term
  • While the HE can be complementary to electrification, it can also be seen as a defensive “molecule” response from fossil fuel incumbents
  • Policy, industrial and investment activity in the HE has exploded over the 2019-2020 timeframe and, although there is a risk of near-term over-enthusiasm, the outlook for the sector looks bright
  • Given the stakes, investor interest – especially among corporates – is very strong, with the “commercial traction” bar lower than for many other cleantech sectors