Hydrogen holds great promise as a green fuel. The rub is that it is still expensive—as are shares in the companies that might help unlock that promise.
Currently used in many industrial processes, the plentiful, versatile gas has the capacity to cut carbon emissions from many hard-to-decarbonize sectors and make renewable energy transportable. The technology necessary to realize this vision is solid, but still needs to be industrialized to reduce costs and prices.
Meanwhile, a stock-market hype cycle is in full swing. In the past year, shares in manufacturers of the hydrogen fuel cells that might power trucks or trains or the electrolyzers required to make so-called green hydrogen have in most cases more than doubled.
Investors have been here before: Interest in hydrogen flared up briefly in the 1990s before fizzling out. The context has changed, though. Most governments now plan to decarbonize; the renewable energy required to make green hydrogen is growing more plentiful; and many industries face strict targets for reducing emissions.
For example, big-rig manufacturers are working on electric trucks to meet tough new carbon-emissions standards set to take effect in the 2030s in Europe and California. Shorter-range vehicles can use Tesla-style lithium-ion batteries, but hydrogen fuel cells—which are light and can be refueled in under 15 minutes—are a more plausible source of clean power for long-distance heavy trucks.
In time, similar technology could help powertrains, ships and even airplanes. Hydrogen also is the only green fuel that can provide the heat required for steel and cement production, two big industrial polluters.
Green hydrogen is produced when renewable energy powers an electrolyzer that breaks down water into hydrogen and oxygen. Hydrogen can thus store excess wind and solar energy, to be used later or liquefied for transport or export.
Governments are keen. They have decarbonization commitments to meet; growing renewable power to store or export; public pressure for climate action; and a resurgent appreciation for energy independence. Hydrogen is a central part of this year’s fiscal stimulus plans in Europe and Asia. Those billions of dollars should accelerate the technology’s industrialization, cutting costs and increasing adoption.
One risk for investors is that this process also crushes margins before the shakeout and consolidation that creates a mature market, as has happened in the solar industry. The other, particularly right now, is that they overpay for shares at a point of peak excitement.
SECOND IN A SERIES
The energy industry will look very different in future as renewable power sources replace carbon fuels. The transition has built up unstoppable momentum, confronting investors with opportunities and challenges alike in sectors as wide-ranging as oil and gas, utilities and industrial technology.
Fuel-cell makers have enjoyed a wave of corporate investment over the past year, notably from the truck industry. Cummins acquired Hydrogenics; Daimler and Volvo created a dedicated joint venture; and Bosch licensed PowerCell’s technology and increased its stake in Ceres Power. That has underpinned a rally in stocks such as Canada’s Ballard and Plug Power of the U.S., which have both more than doubled.
Electrolyzers are another popular niche. A flurry of megaprojects has pushed shares in McPhy, Nel Hydrogen and ITM Power up 168%, 229% and a whopping 731% in the year, respectively.
More cautious investors might prefer Europe’s established gas giants, AirLiquide and Linde. They know how to produce and distribute industrial gases, including hydrogen, and have also acquired stakes in electrolyzer makers and big hydrogen projects. It is a more diversified investment, but they are profitable and the shares only trade for earnings multiples in the mid-20s.
There are good reasons for the hydrogen buzz, but the road to adoption is a long one.
Markets Insights in Your Inbox
Get smart analysis on stocks and industries, delivered Monday through Friday after market close with the Heard on the Street newsletter. Sign up.
Write to Rochelle Toplensky at rochelle.toplensky@wsj.com
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
"fuel" - Google News
June 26, 2020 at 06:40PM
https://ift.tt/3g1E7f0
Is Hydrogen the New Wonder Fuel? - The Wall Street Journal
"fuel" - Google News
https://ift.tt/2WjmVcZ
Bagikan Berita Ini
0 Response to "Is Hydrogen the New Wonder Fuel? - The Wall Street Journal"
Post a Comment