No longer glittering?

May 7, 2021


 

We believe the electrolyzer is an important enabling technology in the production of more environmentally friendly hydrogen. Electrolysis currently provides around 1% of hydrogen production, but this should increase with the focus on reducing the carbon footprint. In essence, this would reduce reliance on so-called grey, brown and even blue hydrogen, which all use fossil fuels. Electrolysis uses a chemical process to split water into hydrogen and oxygen by applying electricity.

When considering green hydrogen, the electricity created must be from renewables in order to be truly “green”. We assume that the increasing scale of electrolyzer production, as well as the declining costs of renewable electricity, will ultimately result in reduced costs of production. This will eventually lead to pricing that is at, or below, fossil fuel parity, making it economically viable.

Once the infrastructure expands and the demand for hydrogen increases, we see its costs lowering to a competitive level.

Rob Zeuthen, portfolio manager, Mellon

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