- The potential for hydrogen to play an important role in the transition to a low-carbon economy is increasingly of interest to investors.
- Some think hydrogen could be key to transforming our energy system and the industries that rely on it; others see it as an inefficient use of scarce resources and a distraction from other low-carbon technologies.
- In our view, hydrogen can be a sustainable solution for the energy transition, but it is not a silver bullet.
- Investors should develop a clear understanding of hydrogen’s possibilities and limitations, and how it fits into different scenarios for reaching net zero, alongside the investment opportunities it can realistically offer.
Hydrogen is the simplest and most abundant element. However, while hydrogen is abundant, on Earth it is usually found as part of a compound – most commonly in water molecules. Producing pure hydrogen therefore requires an input of energy, which can then be released when burned. As a result, hydrogen itself is not a source of energy, but can be thought of more as a form of energy storage, much like conventional batteries.
We consider the challenges of hydrogen production—including the options available for producing low carbon hydrogen—and look in detail at the contribution that hydrogen could potentially make to global decarbonisation efforts.
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