While hydrogen is the most common element in the world, it does not occur naturally and is always found in combination with other elements such as water or in hydrocarbons that make up fuels such as gasoline and diesel. The hardest part about using hydrogen as a fuel source is getting it in its purest form. This is done using either a process called steam reforming (using steam to react with a hydrocarbon fuel) or electrolysis (splitting water into its basic elements using an electric current).
In the global push for net-zero emissions, hydrogen is fast being pushed as one of the leading solutions to help the world reach its emissions goals. Hydrogen is currently bucketed into 3 categories depending on how it is produced – grey, blue and green. Grey hydrogen is hydrogen produced using fossil fuels such as natural gas where carbon dioxide is emitted. Blue hydrogen is hydrogen that is generated using non-renewable energy sources but the carbon dioxide is stored or reused and green hydrogen is hydrogen that is generated using renewable energy sources and emits no carbon dioxide. Currently, over 90% of hydrogen produced is considered grey hydrogen.
Currently the biggest issues with producing green hydrogen is its cost competitiveness as well as a lack of infrastructure and storage capacity. We believe ultimately the key to hydrogen’s success will be governments willingness to support the industry through policy initiatives including regulation and taxation and well as a carbon credits system. Similar to what we are seeing in electric vehicles, the hydrogen economy should also benefit from technological advancements and economies of scale that should improve its cost curve position over time.
Even with the issues around cost, green hydrogen projects are being announced around the world. Recently Saudi Arabia announced a $5bn green hydrogen project making it the largest project in the world. Once completed the project will produce enough green hydrogen to power the equivalent of 20 000 hydrogen-fueled buses. Examples of smaller projects include ones such as Anglo American Platinum rolling out a fleet of hydrogen fueled trucks at their mines.
Interestingly, one of the long-term beneficiaries of the hydrogen economy could be platinum. While this could ensure the longevity of the pgm industry, it is unlikely to move the needle much this decade with demand for pgm’s largely still being driven by automobiles that use internal combustion engines.