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Hydrogen- the replacement of fossil fuels?

Hydrogen is the new blue-eyed boy on the streets.

In recent years, there has been increasing political pressure for governments and bodies around the world to be pursuing green energy. The millennials feel that enough is enough, and it is time we do something about the global warming situation before it got too late. Sustainability is now the keyword. Everyone is talking about how we create a sustainable world for the future generation. This results in traditional energy sources such as fossil fuels being frowned upon. Even giant oil companies like Shell and BP are forced to rethink their business. These companies are now in a situation where they have to reinvent themselves and do the biggest manoeuvre of their business models. That is to being less of an oil company and more of an energy company. Clean and green energy is the way to go, most said.

That brings hydrogen to the focus of many. People are starting to rethink how they could create energy using hydrogen, and perhaps bring it to large scale adoption. The promise of clean energy with only water as a byproduct by adopting hydrogen as an energy source seems to be the perfect scenario for anyone who cares about the environment. No more carbon dioxide pollution and depletion of our ozone layer.

And it's not the first time hydrogen was thought to be an alternative source of energy. In fact, it was a huge topic in the early 2000s when people began exploring cleaner ways to create energy aside from the use of fossil fuels. However, hopes of having hydrogen as an alternative source of energy quickly fizzed out when several key constraints were met. There are a few ways to create hydrogen for energy use, you see. The first way involves splitting natural gas to produce hydrogen. This way is both costly and environmentally unfriendly as it emits carbon dioxide too. So it definitely defeats the purpose of creating hydrogen for cleaner use when you are also emitting carbon dioxide as part of the process. The second way involves the using surplus renewable energy (eg. wind and solar energy) collected to split hydrogen from water. This is a much more environmentally friendly way, but it was also costly as renewable energy sources such as wind and solar energy are expensive ways to harness energy at that point of time. Hence, the idea of using hydrogen as an alternative energy source wasn't very much a viable idea to many.

Until now.

With the progress of technology, the costs of harnessing wind and solar energy are significantly cheaper as compared to the early 2000s. It is now viable to use wind and solar energy as alternative energy sources in countries with huge natural terrain advantages such as Germany and Netherlands. While harnessing such energy is becoming less of a problem, storing them continues to be a key technological issue as there is simply no good way for you to be storing these wind and solar energy for use later. That is also the reason why fossil fuels are very much preferred as they provide a constant source of energy unlike wind and solar energy sources. Now, this is probably where hydrogen comes in nicely. You could use the surplus energy collected from wind and solar sources to split hydrogen from water and store them in fuel cells. In this way, you could rely on these fuel cells to be providing you a constant energy source, just like fossil fuels. It was the plan people were thinking of in the 2000s but it was unfortunate renewable energy like wind and solar energy are too expensive then. Now, it becomes more commercially viable to be considering the use of hydrogen fuel cells.

That doesn't mean we are ready to widely adopt the use of hydrogen fuel cells everywhere. To facilitate wide scale adoption of hydrogen fuel cells, you would need to have the infrastructure to do so and that isn't going to be something you could just create overnight. A hydrogen fuel station will take anywhere between 18 and 36 months to complete and cost somewhere around $1 million. Such huge costs and long construction time will deem it not viable to be ready for wide scale adoption just yet. And hence you wouldn't really see hydrogen being the main source of energy for the automotive market any time soon. However, you might start to see hydrogen being adopted for railways soon. Several nations like Germany and the UK are investing in hydrogen for their railway technology. Trial for the first hydrogen-powered train is already beginning in UK.

Aside from railway technology, hydrogen could also prove to be useful for several industrial applications. For instance, warehouses. In a lot of the warehouses, forklifts are usually still powered using batteries. This comes with significant downright as the battery is often heavy and could take hours to refuel. On the other hand, the use of hydrogen is much more viable in this case as it is much lighter and filling up a hydrogen tank could just take minutes. Also, limiting the use of hydrogen in industrial places such as warehouses took away the problem of having an extensive hydrogen infrastructure for use (which is the main issue for the automotive market). The movement of forklifts are limited within the warehouse and hence refuelling the forklifts using hydrogen is a much simpler task since you would only need to invest in having the hydrogen infrastructure in the warehouse and not everywhere else. Besides forklifts, use of hydrogen is also suitable for heavy industrial equipment such as diggers etc for the very same reasons explained above.

The use of hydrogen to fulfil more of our clean energy needs does indeed seem to be more and more promising. Of course, some might argue that lithium ion batteries might be a better option. Elon Musk is not a fan of hydrogen fuel cells and refers them as "fool cells", probably due to the inefficient energy conversion process. Nonetheless, some car manufacturers might not think so and are not ready to give up on hydrogen. For example, Toyota and Honda are now working with Shell to expand the hydrogen refuelling network in California. There is also belief from research that hydrogen fuels cells have the potential to cost less than lithium ion batteries yet providing a larger distance range for use. Hence, I personally think that the hydrogen space is definitely worth watching as it could be a big growth sector in the energy space.

If you are wondering which stocks could benefit from this hydrogen economy, I would cover them in my Patreon page. Hence, do take a look at them if you are a patron.

Till the next time.

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