According to Goldman Sachs, hydrogen has a significant role to play in any transition to net-zero and its creation might grow into a business worth over $1 trillion annually.
The bank’s commodity equity business unit chief for the EMEA area, Michele DellaVigna, said earlier this week on CNBC’s “Squawk Box Europe” that “if we want to go to net-zero we can’t do it solely through renewable electricity.”
“Hydrogen is what we need to replace natural gas in today’s world, especially to handle seasonality and cyclicity.”
Applications for hydrogen are many, and it may be used in a variety of sectors.
It’s a really potent chemical, according to DellaVigna. “We can utilize it for heavy industries, heavy transportation, and heavy heating.”
He stressed that “producing it without CO2 emissions” was crucial. And for this reason, we discuss green and blue hydrogen.
We must produce hydrogen in a clean manner, whether we do it through electrolysis or carbon capture, according to DellaVigna.
And once we have it, I believe we have a solution that might, one day, account for at least 15% of the world’s energy markets, which would make it a market worth more than $1 trillion annually.
“For this reason, I believe we should concentrate on hydrogen as natural gas’ replacement in a net-zero world.”
The analysis in recent research from Goldman Sachs Research, which he co-authored, is echoed in DellaVigna’s remarks.
According to the report’s bull scenario, which was published earlier this month, the total addressable market for hydrogen generation may reach more than $1 trillion by 2050, up from around $125 billion at the current time.
While some are excited about the promise of hydrogen, the vast bulk of its production still relies on fossil fuels. However, steps are being taken to fix this.
For instance, by 2030, the European Commission intends to construct 40 GW of renewable hydrogen electrolyzer capacity throughout the EU.
When questioned about the companies that investors ought to consider in order to benefit from the anticipated rise of the hydrogen industry, DellaVigna responded in the affirmative.
He said that there are two methods to invest in hydrogen. One is to invest in firms that “have the pure exposure to hydrogen,” such as pure-play electrolyzer companies.
Investing “through corporations that already have hydrogen as part of their continuing activities” might be one alternative. According to him, this included energy service providers, industrial gas providers, and oil and gas businesses.