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Investment opportunity in ‘green hydrogen’ may not be where you think

Monika Skolimowska | picture alliance | Getty Images

As the world looks to move towards a low-carbon future, the potential of “green hydrogen” — which is produced using renewable energy — has garnered increasing interest from businesses, governments and investors alike.

In the last few years, major firms including Repsol, Siemens Energy, Orsted and BP have got involved in projects connected to green hydrogen production. But while the development of these sorts of projects will be crucial, a key investment opportunity, according to one strategist, lies in the sector underpinning green hydrogen: renewables. 

“The largest amount of money here, in terms of the investment opportunity for green hydrogen, is really, actually, in more renewable energy,” Mark Lewis, who is chief sustainability strategist at BNP Paribas Asset Management, told CNBC on Monday.

“Because clearly, when you produce green hydrogen it’s from … zero emissions power sources — that’s what’s going to be powering the electrolysers,” Lewis added.

A multi-layered process

Green hydrogen refers to hydrogen produced via the electrolysis of water, with the electricity used in the process coming from renewable sources like wind and solar.

Described by the International Energy Agency as a “versatile energy carrier,” hydrogen has a diverse range of applications and can be deployed in sectors such as industry and transport. Examples of its use in the latter include trains, airplanes, cars and buses powered using hydrogen fuel-cells.

It’s seen as a crucial cog in the European Union’s plans to decarbonize. The EU has laid out plans to install 40 gigawatts of renewable hydrogen electrolysers and produce as much as 10 million metric tons of renewable hydrogen by 2030. To put that figure into context, the International Energy Agency says that global hydrogen production currently amounts to roughly 70 million metric tons per year.

With regards to the investment opportunity required to meet the EU’s 2030 production goal, BNP Paribas Asset Management’s Lewis said: “About 400 billion is what we think will be required, and fully half of that is for dedicated new renewable energy capacity. So … this is only going to increase the growth opportunity that was already there around renewables.”

Infrastructure and logistics

Environmental effects and cost-reductions

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Investment opportunity in ‘green hydrogen’ may not be where you think

2020-10-13 07:05:57

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