Goldman Sachs: Hydrogen Generation Has The Potential Of Becoming A $1 trillion Market Per Year

Hydrogen has an important role to play in any transition to net-zero and its generation could develop into a market worth over $1 trillion a year, according to Goldman Sachs.

“If we want to go to net-zero we can’t do it just through renewable power,” Michele DellaVigna, the bank’s commodity equity business unit leader for the EMEA region, commented.

Described by the International Energy Agency as “a versatile energy carrier,” hydrogen can be produced in a number of ways. One method includes using electrolysis, with electric current splitting water into oxygen and hydrogen.

Blue hydrogen refers to hydrogen produced using natural gas — a fossil fuel — with the CO2 emissions generated during the process captured and stored. There has been a charged debate around the role blue hydrogen can play in the decarbonization of society.

“Whether we do it with electrolysis or we do it with carbon capture, we need to generate hydrogen in a clean way,” DellaVigna said.

“And once we have it, I think we have a solution that could become, one day, at least 15% of the global energy markets which means it will be ... over a trillion-dollar market per annum.”

“That’s why I think we need to focus on hydrogen as the successor of natural gas in a net-zero world.”

DellaVigna’s comments echo the analysis in a recent report from Goldman Sachs Research which he co-authored. Published earlier this month, the report’s bull scenario sees hydrogen generation’s total addressable market having the potential to hit more than $1 trillion by 2050 compared to around $125 billion today. 

During his interview, DellaVigna was asked about the stocks investors should look at to take advantage of the hydrogen sector’s projected growth.  “There’s two ways to invest in hydrogen,” he said. “One is to buy the pure play electrolyzer companies which have the pure exposure to hydrogen.”

The alternative would be to invest “through conglomerates which already have hydrogen as part of their ongoing businesses.” This included energy service companies, industrial gas companies, and oil and gas firms, he said.

SOURCE: CNBC
IMAGE SOURCE: PIXABAY