The Rapidly Incoming Hydrogen Boom

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In today’s Money Morning…the iron ore magnate turned green energy crusader…going green for good…an opportunity unlike any other…and more…

The energy crisis fears don’t look to be going away anytime soon…

In fact, oil is hitting prices not seen since late 2018. While gas prices, on the other hand, are still going absolutely nuts.

All of which seems to suggest that the world’s energy supply woes may get much worse before they get better. And while I’ve already put forward my opinion on the matter, it is certainly an interesting topic.

Especially when you look at the recent announcement out of Queensland yesterday.

In case you missed it, the Sunshine State is set to become the home of the world’s largest green hydrogen plant. A project that is being spruiked and bankrolled by Andrew ‘Twiggy’ Forrest. The iron ore magnate turned green energy crusader.

So could this be the timely solution Australia needs — or is it just the distant pipedream of a stubborn billionaire?

Going green for good

Personally, I’m on board with Forrest’s hydrogen push in Australia. Albeit, with an added (healthy) dose of scepticism as to just how much control he wants over this green future for himself.

Because as most people know by now, whether we like it or not, the world is likely headed towards a net-zero future. A goal that has been earmarked for compliance by most major nations on or before 2050.

Getting to this goal, though, is the tricky part.

After all, many of the renewable energy technologies emerging today are fantastic but certainly not perfect. The major stumbling block often revolves around storage or transportation of said energy, rather than the generation of it.

Hydrogen, though, presents an interesting middle ground. An abundant and fairly suitable replacement for traditional fossil fuels like coal, oil, and gas.

At least, that is the argument being put forth by Forrest and others. And in order to get ahead of this transition, Fortescue is going to build a green hydrogen manufacturing facility in Queensland.

As ABC News reports:

Mr Forrest said the first stage of the project will be a hub that will build green energy infrastructure and equipment, such as cabling and wind turbines.

More importantly, it will manufacture electrolysers.

The facility is destined to be built on Queensland government-owned land near Gladstone in Central Queensland and is the first stage of a six-step, $1 billion-plus operation.

A resource-intensive venture that will then provide a product fit for domestic and export markets. The kind of solution that may finally topple our reliance on fossil fuels.

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An opportunity unlike any other

Now, while all this speculation and planning is certainly fascinating, it does pose some serious questions for investors. For instance, does this massive green hydrogen plant mean that it is time to exit any and all petroleum stocks?

In the short term, probably not…

But what it does suggest — at least in my opinion — is the ongoing shift toward a need for new energy solutions. A need that is cultivating opportunities for investment in ambitious projects like this hydrogen plant.

And Andrew Forrest’s green hydrogen dream certainly isn’t the only opportunity like this.

The AFR, in conjunction with Deloitte, discussed the complexities of the global energy transition in an article yesterday. One of the outlet’s more insightful reads as it outlined a future of great change for those bold enough to seize it:

This increasingly diverse landscape and the scale of disruption is challenging the legacy of incumbency, and presenting opportunities for innovative, agile, and adaptive organisations prepared to embrace the change.

Focus on renewables, electric vehicles, carbon capture and storage, hydrogen, and biofuels are the key technologies that will draw on our unique resources, capabilities, and connectivity to Asia.

These two sentences perfectly capture a future that seems the most likely to be headed our way. A conclusion that doesn’t suggest a need to panic sell out of existing energy stocks, but to at least consider what the coming years may entail for them.

Because whether you agree with this forecast or not, a good investor knows when to listen to the market. And right now, despite the lingering fear, the long-term outlook for energy investment is far more exciting and promising than it has been in quite some time.


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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