2 min read 26 Nov 21
One of the most exciting opportunities on the path to net zero and de-carbonising electricity generation is hydrogen, or more specifically green hydrogen. A future fuel that is here with us today and the cleanest burning fuel that has yet been discovered, hydrogen is present everywhere as it is the most abundant element in the universe. Most importantly for the goal of reducing carbon emissions, when hydrogen combusts, or burns, the only by-product it emits is water.
Currently, 30% of greenhouse gas-producing activities, such as aviation, shipping, heavy goods vehicles, and the manufacture of steel, cement and chemicals, cannot be economically electrified.* Because of this, we need a substitute for oil and gas that has the interchangeability and transportability of those materials, but isn’t as costly or as heavy as batteries, and green hydrogen looks to be where both policymakers and industry are settling.
Traditionally, hydrogen has been created using fossil fuels to split it from natural gas, which releases large amounts of carbon dioxide into the atmosphere and contributes to climate change. However, so-called green hydrogen is produced using renewable electricity generated by wind turbines and solar panels, for example, to power electrolysers that split water into hydrogen and oxygen.
This development has created an opportunity for the utility sector in particular, as renewable energy deployments with excess power generation can be used to produce green hydrogen. It needs to be transported and stored (either in liquid form or in a fuel cell), and we believe the existing natural gas infrastructure in various countries around the world can be repurposed and re-engineered to accommodate hydrogen, not just in the existing natural gas stream, but ultimately on its own.
This has both residential and industrial applications, and although the technology is in its infancy and not economic to scale currently, it represents a promising climate solution. Already, companies are investing in hydrogen production and trialling the use of the element within the natural gas stream.
We see significant opportunities in the future in our investment process for this fuel of the future.
*Energy Transitions Commission report
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