March 2023 | 4 minute read | Marketing Communication
It is colourless, has no taste or smell, and is the lightest and simplest of all the chemical elements. Yet it is becoming increasingly clear that this highly flammable gas could play a central role in tackling the planet’s climate crisis. This gas is hydrogen, the most abundant element in the known universe.
"Because hydrogen can store as well as transmit energy, it solves the problem of what to do with the excess power generated on very windy and hot days, and how to secure supplies when the air is still and the weather cloudy."
"Its energy potential also extends to transport. Hydrogen fuel cells, for example, are a comprehensive and environmentally friendly way to power buses, trains, cars and motorbikes."
"Slowly, hydrogen is moving into the mainstream, in part thanks to the extensive financial support that largescale projects are receiving from governments and the private sector."
Where is it?
Hydrogen can be found in huge quantities in the earth’s waters and oceans, and is also present in fossil fuels, particularly natural gas. But that doesn’t mean it’s easy to get at. In fact, pure hydrogen almost always has to be extracted from another substance that it is part of.
The best example of this is probably water, or H2O, which consists of two atoms of hydrogen and one of oxygen. Traditional methods of extracting hydrogen involve fossil fuels and are highly carbon intensive, but more modern techniques are carbon free and, crucially, produce clean energy.
What does it do?
Hydrogen is extremely versatile: it can be used in gas or liquid form and be converted into electricity or fuel. Particularly usefully, it can also store energy.
As things stand, the gas has a wide variety of industrial uses, including in the production of ammonia, which is contained in most of our household cleaning products and also used in agricultural fertilisers.
Why do we care?
However, what makes hydrogen so exciting is its potential use with energy, particularly involving renewable sources such as wind and solar power.
Because the gas can store as well as transmit energy, it solves the problems of what to do with the excess power generated on very windy and hot days, and how to secure supplies when the air is still and the weather cloudy1.
As well as power, hydrogen can be used to generate heat. And when heat and power are combined, it provides a huge energy resource for industry and commerce, public and private utilities and, ultimately, individual households.
This energy potential also extends to transport. Hydrogen fuel cells, for example, are a comprehensive and environmentally friendly way to power buses, trains, cars and motorbikes. Hydrogen fuel cells produce electricity by combining hydrogen and oxygen, generating water and heat as a by product.
Why is hydrogen so significant now?
Well, the answer lies in two developments.
The first is climate change. If we are to stand any chance of preventing the relentless rise in the earth’s temperature, and the dramatic changes in weather patterns that it is causing, we have to cut our carbon emissions to zero by 20502.
Our future literally depends on us phasing out polluting fossil fuels — coal in particular — and replacing them with carbon-neutral energy forms, such as renewables.
However, on their own, renewables are not enough, because some activities, including heavy industry, shipping and aviation, are particularly hard to decarbonise due to the amount of power they require. Hydrogen’s potential to both transmit and store particularly strong energy has the potential to make this feasible.
The second is modern technologies. At the moment, more than 95% of hydrogen is produced from fossil fuels in a highly carbon-intensive process1.
This is often called brown or grey hydrogen. However, more modern techniques involve separating water and hydrogen using electricity that is derived from renewable sources. The so-called green hydrogen this creates is entirely carbon neutral. The cost of the process is also steadily falling as the price of renewables falls.
Slowly, hydrogen is moving into the mainstream, in part thanks to the extensive financial support that largescale projects are receiving from governments and the private sector. It makes sense for those committed to combating global warming and promoting sustainability to think today about the potential hydrogen has in unlocking the clean energy transition.
Sources Amundi Asset Management as at March 2022.  International Renewable Energy Agency - Hydrogen from renewable power.  2021 United Nations Climate Change Conference, Glasgow, November 2021
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of March 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
Date of first use: March 2022
Doc ID: 2029134
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