In the race to reduce global carbon emissions to zero, clean hydrogen is increasingly expected to be a winner. Hydrogen is the most the most abundant elements in the universe, and has long been looked to as part of the solution as the world shifts away from fossil fuels. But the path to its use has been riddled with obstacles. Top among them has been its cost, but new methods of hydrogen production are less expensive, and that’s a gamechanger that could propel hydrogen stocks in the years to come. “We believe that clean hydrogen has emerged as a critical pillar to any aspiring net zero path, aiding the de-carbonization of [circa] 15% of global [green house gas] emissions across sectors,” Goldman Sachs analysts wrote in a recent research report on the topic. The firm estimates that the total addressable market for hydrogen generation could reach more than $1 trillion by 2050. To get to net zero by that date, Goldman projects $5 trillion will need to be invested in the hydrogen supply chain. Goldman said hydrogen is versatile and generates a lot of power , which means it can be used for things like moving heavy vehicles and heating furnaces to make steel that aren’t easily accomplished by other fuel sources. Industrial applications, which account for most of the the hydrogen demand today, will represent only 15% of total hydrogen demand by 2050, according to a November report on the industry published by the Hydrogen Council in collaboration with McKinsey & Co. The most powerful use for hydrogen by 2050 is expected to be in mobility, including in heavy trucking, aviation and container ships, McKinsey said. Hydrogen can also be used for long-duration and high-capacity energy storage, which is key to increase reliance on solar and wind renewable energy. What’s changed Although hydrogen is abundant, it is usually attached to other molecules and the chemical bonds must be broken to extract the hydrogen. In the vast majority of cases, this has been accomplished using a fossil fuel like natural gas, which can contribute to climate change. But “green” and “blue” hydrogen are changing the equation, Goldman said. Green hydrogen is generated by extracting the molecule via water electrolysis in which the electricity used is powered by renewable and low-carbon energy, resulting in no emissions. As the costs of renewable power falls, green hydrogen is becoming a better solution to decarbonization, Goldman said. The firm expects more than $2 trillion to be spent on…
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