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How Hydrogen Will Help Industrials Meet Decarbonization Goals And Leave Fossil Fuels Behind

By September 20, 2021November 28th, 2021No Comments

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How Hydrogen Will Help Industrials Meet Decarbonization Goals And Leave Fossil Fuels Behind

Sep 20, 2021 • CB Insights

With funding and industry interest in hydrogen tech reaching record highs, we explain how the element can be used to decarbonize operations — across manufacturing, transportation, and utilities — and address key challenges and opportunities in the space.

As the manufacturing, transportation, and utility sectors look to reduce their carbon emissions, hydrogen could be the most promising energy source. But for adoption to catch on broadly, the price of hydrogen needs to drop considerably to compete with fossil fuels. Hydrogen production capacities and distribution networks will also need to ramp up to support higher volumes.  To address these challenges, investors plan to pour about $500B into hydrogen projects globally through 2030. These initiatives are designed to reduce the price of hydrogen — especially green hydrogen — dramatically.

Hydrogen infrastructure is being built out across three main segments:  Hydrogen Production, Hydrogen Storage & Distribution, and Hydrogen Utilization. Each part of the hydrogen value chain is at a relatively early developmental stage. To bring the industry to the next level, each segment is seeing increased investment, pilot, and construction activity:

  • Hydrogen production companies have accounted for more than half of hydrogen tech deals in 2021 YTD, as companies are trying to rapidly build plants to meet the growing demand. The vast majority of these facilities are electrolysis plants that will produce green hydrogen.
  • The hydrogen storage & distribution segment has accounted for less than 10% of deals in 2021 so far, as these companies tend to be specialty businesses focused on a single aspect of hydrogen storage and distribution, like hydrogen storage tank specialists. On the other hand, public companies like Chart Industries are tackling capital-intensive, large-scale investments to move hydrogen long distances via pipes, trucks and tanks.
  • Utilization is primarily centered around hydrogen-powered vehicles and manufacturing. Hydrogen-powered vehicles, planes, and other forms of transportation have attracted attention and funding in the last year. For instance, fuel cell truck maker Hyzon Motors went public via a SPAC this year, raising over $600M in proceed.
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