Hydrogen-linked stocks have raced to their strongest levels in more than a decade, according to the Financial Times. But the paper’s February analysis offered a rather sour view of the current surge in the stock market value of the hydrogen economy.
The article recalled a period in the 1990s when companies with similar green credentials attracted huge interest only to see their share prices crash and burn later. But the FT may be drawing a false comparison here.
Because this time around, it’s not just here-today-gone-tomorrow speculators who are sinking cash into the green hydrogen sector. It’s states.
China, Korea, the US, Japan and Australia are all investing in a hydrogen future, and the 27-member European Union (EU) is at the forefront with a series of billion-dollar programs.
Hydrogen to supply 24% of energy demands
The EU has been running a Fuel Cells and Hydrogen Joint Undertaking (FCH JU) for more than a decade, and back in 2014 funded the program as part of its vast EU Horizon 2020 Framework.
In total, the FCH JU has enjoyed funds of €1.33 billion (USD$1.47 billion) from 2014 through 2020. A second phase of investment, FCH 2 JU, is being finalized to run until the end of 2024.
It’s a public-private initiative with the stated aim of accelerating the introduction of hydrogen energy and fuel cell technologies which will contribute towards 24% of the EU’s total energy demand.
An early success for the project includes ramping up electrolytic production of hydrogen. In 2019, construction started on the world's largest polymer electrolyte membrane electrolyser, funded in part by the FCHJU.
The 10MW plant, located at the Shell Rheinland refinery in Germany will produce up to 1,300 tonnes of hydrogen per year when operating at peak capacity.
The FCH JU initiative is incentivizing automotive hydrogen, with plans for refuelling infrastructure in 22 European cities and a rise the number of fuel cell powered buses from the current 50 to 365.
Research into the best ways to deploy fuel cells in trucks, ships and even aircraft is also being funded.
Elsewhere, a European consortium called H2Bus aims to put 1,000 hydrogen-powered buses on the streets of Europe’s major cities, plus the refuelling infrastructure to make them viable.
The scheme will also build centralised electrolytic hydrogen production plants to keep the vehicles running. The consortium is planning to have 600 buses in its first phase of rollout, supported by €40 million from the EU’s Connecting Europe Facility fund.
The grant should enable the deployment of 200 hydrogen fuel cell electric buses in Denmark, Latvia and the UK each by 2023. Norway, Sweden and Germany are locations being considered for future phases of the project.
City buses are an ideal way to showcase the practical advantages of hydrogen-based transport. The H2Bus consortium is offering single-decker fuel cell buses for around $415,000.
By way of comparison, diesel buses, the most common type of bus in the US, typically cost about $550,000 per vehicle. The range of these fuel cell vehicles is roughly 450 km (280 miles) between refuelling.
And unlike electric buses, the fuel cell vehicles have comparable refuelling times to their diesel-powered cousins. Delivering fuel to these vehicles will of course require a robust hydrogen distribution system. But here again, Europe is on the case.
Readying hydrogen distribution
Europe’s largest gas grid operator has big plans for hydrogen. Italy’s Snam confidently predicts Italy will get 23% of its energy from hydrogen by 2050. It has created a new hydrogen business unit, aiming to direct 20% of its investments to low-carbon projects.
Financially backed by the Italian government, it also does business in Greece, France and the UK.
The company says it want to reduce some of its natural gas business by switching to biomethane and renewably produced ‘green’ hydrogen, as opposed to current supplies of the gas, which are produced by carbon-intensive processes.
Snam is already injecting green hydrogen into its grid in Southern Italy so that the resulting gas burned by consumers is 5% hydrogen. The company hopes to double that concentration of hydrogen by the end of this year.
An interesting detail of this story is that Snam found its natural gas network was already largely hydrogen-ready, requiring only minimal and inexpensive modifications.
The company is also looking to generate additional electricity, in conjunction with power grid operator Terna, in order to convert excess energy into hydrogen. Furthermore, it is exploring the possibility of storing that hydrogen underground.
UK commitments to hydrogen
The UK, thanks to brexit, is in the painful throes of detaching itself from the EU. But it still seems to share the interest in hydrogen which is animating its ex-partners.
The formerly coal-fired Drax power station in the north of England has converted to biomass and is also being earmarked for a large hydrogen production plant.
This will be so-called grey hydrogen, produced via a carbon-intensive mechanism, but as the Drax complex now includes carbon capture and storage the whole process could become carbon free.
The proposed role of the hydrogen is to help decarbonize heat, transport and industry. The consortium responsible for the proposed 12GW facility claims that by 2034 it will supply carbon-free heating to just under 4 million UK homes.
Uniquely, the UK has signed off on becoming carbon neutral by 2050, a goal which will likely require extensive use of hydrogen for energy storage, transportation and heating. The EU’s targets, meanwhile, are more immediate and possibly intended to be more realistic.
The EU is looking for a 40% reduction of greenhouse gases, compared to 1990 levels, by 2030. The economic bloc is looking at a whole slew of initiatives to comply with that figure, from investing in renewables to waste reduction and insulation for homes.
Hydrogen investment is one strategy among many, but for long-term decarbonisation there are not many other options on the table. If Europe makes good on its hydrogen plans, the need for fuel cells will mushroom.