When one of the world’s largest oil and gas producers commits to investments of more than $11 billion to develop hydrogen fuel, it is probably time to pay attention. Norway’s state-controlled oil and gas giant, Equinor, has made that move.
The company is betting that it can produce so-called blue hydrogen, made from natural gas, more cleanly than any competitor, according to a report from Bloomberg. Equinor is not aiming at the transportation market but at huge industries like steel and cement that emit millions of tons of carbon dioxide. Along with partners and government funding, Equinor is planning to invest some $11 billion in blue hydrogen by 2035.
In the transportation sector, automakers Toyota, Honda and Hyundai already are producing passenger cars that use hydrogen for fuel, and Daimler, Toyota and Hyundai are developing trucks that use the fuel. However, there are a number of obstacles to overcome. First, obviously, is convenience. Outside of California, hydrogen refueling stations are practically nonexistent, and they cost about $2 million each to build. A battery charger costs about $50,000 to install, and a gas station’s tanks and other infrastructure cost around $400,000.
RBN Energy has taken a comprehensive look at hydrogen as a transportation fuel and concluded: “Either the cost of hydrocarbon fuels would have to rise to much higher levels, through either market or government action, or hydrogen costs will need to be reduced considerably to make them competitive.”
Where does that leave investors? According to RBN Energy: “For savvy investors, hydrogen presents interesting opportunities, but for hydrogen to be ultimately competitive it may require consumers to accept higher prices relative to current petroleum-based fuels.”
Just looking at the returns, both in dollars and positive impact on the environment, going after stationary targets like steel and cement plants may make more sense. We have looked at a number of hydrogen producers, fuel cell makers and truck makers. The five best performers include two fuel cell companies and three hydrogen producers.
Fuel Cell Energy
Fuel Cell Energy Inc. (NASDAQ: FCEL) is a full-service designer, manufacturer and servicer of stationary fuel cell power plants. In addition to its natural-gas-fueled products, the company also has a hydrogen fuel cell power plant that produces additional hydrogen from the natural gas plants that can be used or sold for transportation or industrial use.