Are Green Hydrogen Stocks a Chance for Investors’ Portfolios Could Balloon Up, Up and Away?
Key takeaways
- Green hydrogen is still in its infancy, with plenty of governments working to make the tech more efficient and less expensive
- Only 0.1% of today’s hydrogen production is green
- There’s enormous potential for investors looking to capitalize on the green energy transition
The renewable energy transition is gaining momentum as new technologies and ideas are being explored to make the global energy supply greener. One of those ways is with green hydrogen; while still nebulous, the industry has a long way to go. With being so new, it offers the potential for investors to get in at the ground level now. Keep reading.
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What’s happening in the world of hydrogen?
Hydrogen is an energy source that doesn’t emit greenhouse gasses when burned, so its potential role in the renewable energy transition is huge. The tech is still in its infancy — we don’t have a way of mass-producing it to compete with fossil fuels yet — but the potential is enormous.
Green hydrogen is where renewable energy powers an electrolyzer to split water molecules and get hydrogen. Unfortunately, the process is currently costly and inefficient; as a result, patents for developing hydrogen tech have soared. Europe currently leads the way, with 28% of patents filed by EU countries in the last decade.
This means for investors, there’s a huge amount of potential in the industry to grow: according to the International Energy Agency, hydrogen demand has tripled since 1975, but only 0.1% of all hydrogen production today comes from a green hydrogen process.
Key hydrogen investments
Linde
German company Linde is one of the leaders in developing green hydrogen, having already made several improvements on the compressing and refueling processes. This year Linde announced it was investing $1.8 billion in building a blue ammonia plant in Texas, with the project starting up in 2025. The stock however has stayed largely unchanged over the years, only gaining 4% since 2018, so the yield isn’t great.
Plug Power
And research is needed with hydrogen stocks, as companies like Plug Power have suffered huge losses since 2021, having reported dismal earnings. It’s a reminder that the industry is still small, and the best returns may come from larger fossil fuel companies who are diversifying with hydrogen investments.
iShares Global Clean Energy ETF
As for ETFs, the iShares Global Clean Energy ETF tracks performance in the clean energy industry and has slowly increased its holdings. However, it’s dropped 7% since the start of the year.
The bottom line
It’s tricky to predict how green hydrogen stocks could fare in the future with the industry still so new, but hydrogen has a role to play in the upcoming green revolution. With the right amount of research done beforehand, a bold investor could stand to gain in the long run.
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