GREEN FINANCE SERIES: THE HYDROGEN ECONOMY

Our current economy heavily relies on hydrocarbons, since heating is mainly fueled by natural gas, and transportation by petroleum. The negative effects of burning fossil fuels, as the emission of carbon dioxide in the atmosphere, are a huge source of concern in today’s global agenda.

In order to phase out fossil fuels and limit global warming, society is envisioning a future in which green hydrogen is used as heating fuel, feedstock, storage solution or for long distance transport of energy. 

The demand for energy is increasing, particularly in developing countries, and green hydrogen can be an environmentally cleaner source and contribute to a more sustainable future.

In this podcast, Gerrit Dubois, Responsible Investment Specialist at DPAM, explains all the possibilities that hydrogen can offer towards the energy transition. Given his background in environmental management, he is specialised in the Environmental pillar of ESG. This dimension is increasingly relevant, especially within the context of the new European taxonomy for sustainable activities, which is very much focused on Climate Change and Environmental Impact.

Firstly, we approach hydrogen as a chemical element and the drivers behind the increasing interest towards the so-called green hydrogen economy. Since hydrogen does not exist in nature as such, we explain how the element can be produced and the different typologies: grey, blue and green hydrogen.

We also review the key challenges associated to green hydrogen development mainly related to the cost competitiveness and capacity versus the need to scale up green hydrogen production, the role of technology and the regulatory framework.

Lastly, we analyse the potential of the hydrogen economy from the investment point of view.  On the equity side, a value chain approach may identify a variety of investment opportunities from production, to manufacturing equipment, transportation and storage beneficiaries. In order to obtain direct investment exposure, credit investments can offer interesting possibilities, given the increase of sustainability-linked and green bonds with a focus on green or low carbon development.

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