· In a recently published paper International Renewable Energy Agency (IRENA) said that hydrogen could disrupt global trade and bilateral energy relations, reshaping the positioning of states with new hydrogen exporters and users emerging. IRENA sees hydrogen changing the geography of energy trade and regionalising energy relations, hinting at the emergence of new centres of geopolitical influence built on the production and use of hydrogen, as traditional oil and gas trade declines. IRENA estimates hydrogen to cover up to 12 per cent of global energy use by 2050.
“Hydrogen could prove to be a missing link to a
climate-safe energy future”, Francesco La Camera, Director-General of IRENA
said. “Hydrogen is clearly riding on the renewable energy revolution with green
hydrogen emerging as a game changer for achieving climate neutrality without
compromising industrial growth and social development. But hydrogen is not a
new oil. And the transition is not a fuel replacement but a shift to a new
system with political, technical, environmental, and economic disruptions.” (See
here)
·
On 15 August 2021, Prime
Minister announced the launch of National Hydrogen Mission (NHM) with an
objective to cut down carbon emissions and increase the use of renewable
sources of energy. NHM aims to leverage the country’s landmass and low solar
and wind tariffs to produce low-cost green hydrogen and ammonia for export to Japan,
South Korea and Europe. It also aims to exploit immense possibilities for India
to collaborate with the Gulf Cooperation Council (GCC) countries that have also
invested significantly in developing hydrogen as a future source of energy.
·
A couple
of months ago, Adani Group announced a mega plan to invest US$70bn in
developing renewable sources of energy. The group chairman Gautam Adani,
reportedly said, "By 2030, we expect to be the world's largest renewable
energy company without any caveat - and we have committed USD 70 billion over
the next decade to make this happen. There is no other company that has yet
made so large a bet on developing its sustainability infrastructure”. He also
claimed that “we are strongly positioned to produce the world’s least expensive
hydrogen, which is expected to be an energy source plus feedstock for various
industries that we intend to play in”. Reportedly, the Adnai Group is already
the world’s largest solar power developer. (see here)
·
Last
month, the largest infrastructure developer in India, Larsen and Toubro
(L&T) announced that it is partnering with ReNew Power to develop and
operate green hydrogen projects across India. The company expects green hydrogen demand in India for applications such as refineries,
fertilisers and city gas grids to grow up to 2 million tonne per annum by 2030
in line with the nation’s green hydrogen mission. This would call for
investments upward of $60 billion. (see
here)
·
Earlier this month, Reliance
Industry announced that it plans to invest ₹60,000
crore, to build an integrated solar photovoltaic module factory, an advanced
energy storage giga factory and an electrolyser giga factory to manufacture
modular electrolyzers used for captive production of green hydrogen for
domestic use as well as for global sale.
·
China has
been investing massively in hydrogen capacities over past five years, as it
aims to achieve peak carbon by 2030 and zero net carbon by 2060. China
automative industry has advanced enough to establish a hydrogen energy value
chain strengthening production of core components
and materials for fuel cells, and scaling production to lower costs.
Several cities across China have released
ambitious hydrogen energy blueprints recently.. Under the Accelerating the
Development and Commercialization of Fuel Cell Vehicles in China program, seven
Chinese cities have reportedly invested US$365 million over the past five
years, far exceeding the initial budget of US$61.73 million. Sinopec has
started building the world’s largest green hydrogen plant in the far Western
region of Xinjiang. As per recent reports, Shanghai expects to have 10,000
hydrogen-powered cars on its roads in 2023, and the value of the city’s
hydrogen car industry is expected to hit 100 billion yuan by 2023. Chinese
experts believe, “It is impossible to use lithium-powered cells for heavy
trucks above 49 tonne, so hydrogen fuel cells are the best alternative, and
logistics-intensive ports across China are especially suitable for establishing
diesel-to-hydrogen demonstration areas”.
From the above cited
instances it is clear that Hydrogen is emerging as a preferred source of clean
energy world over, in addition to the other renewable sources of energy like Solar
and Wind. Green hydrogen, the hydrogen produced through the electrolysis
process, is apparently a more viable and preferred fuel for larger motor
vehicles and air transport as compared to the lithium battery cells powered
through solar or thermal energy.
As per IRENA, “The technical potential for hydrogen production significantly exceeds estimated global demand. Countries most able to generate cheap renewable electricity will be best placed to produce competitive green hydrogen. While countries such as Chile, Morocco, and Namibia are net energy importers today, they are set to emerge as green hydrogen exporters.” It is expected that by 2030 green hydrogen would cost-compete with fossil-fuel hydrogen globally.
Growth of the hydrogen economy will translate into exponential growth in key equipment, component and chemical suppliers. This will also result in some moderation in present estimates for battery cell powered vehicles.
Investors may therefore
beware of investing in a technology or practice that is transient in nature. I
would though continue to prefer “sustainable growth” as a whole, as an
investment theme rather than focusing on one or two enablers like clean energy.
In 10 years, geopolitical
and global trade reorganization would be a much bigger investment theme than
solar power plants and lithium batteries, in my view.
