Published:
According to many experts, hydrogen is the new, future oil. By 2050, the global market could reach a sales volume of up to $2.5 trillion, according to a calculation by the management consultancy McKinsey. In addition to reducing emissions, the main long-term drivers are the rising global demand for sustainably generated energy and the move towards a circular economy. This trend is being accelerated even further by politicians who have announced a green economic stimulus program, while at the same time efforts are being stepped up under the Paris Agreement.
In 2020, a distinct revaluation of hydrogen shares led to a significant rise in their price. Since the beginning of the year, the euphoria has cooled down again. Overall, we are only at the beginning of the "green" energy transition and "green" hydrogen is experiencing a strong regulatory push. It is key to sectors of the economy where emissions are otherwise difficult to reduce. In addition, low-cost green electricity and increasing economies of scale in industry are having a degressive effect on costs. On the other hand, the industry will still be heavily dependent on subsidies in the first half of this decade, which generally exhibit a not inconsiderable degree of volatility.
The construction and operation of buildings play a decisive role
Looking at the subsectors, demand for solar and onshore wind turbines continues to grow with technological progress in both existing and new markets, and is increasing competition. This is the real driver for the electrification of the global economy, which is also the key to a zero-emissions future. Today, 80% of energy is still generated from fossil sources. In 2050, by contrast, around 80% of energy will come from electricity generated from renewable sources.
Energy efficiency also remains important. This manifest itself especially in the three sectors of transportation, industry and construction. The construction sector is currently the most attractive, as it is strongly supported by its favorable valuation. In addition, growth prospects are improving in view of the infrastructure packages expected from the EU and the USA to stimulate the post-pandemic economy while reducing emissions. The construction and operation of buildings - responsible for 30 to 40% of global final energy consumption and energy-related CO2 emissions - will play a crucial role.
In the spotlight: electricity storage
Last but not least, offshore wind energy is also likely to grow very strongly, as this sector will advance to such an extent that it will be able to compete with solar and onshore wind energy in terms of costs without subsidies. In addition, electricity storage appears to hold opportunities, as large numbers of batteries will be needed in the future both to electrify the transportation sector and to support the power grids. Given the strong volume competition with limited unique selling points and the fact that battery technology remains a risk, the investment opportunities are admittedly not very attractive at present. However, investors should continue to keep an eye on this topic.
One position that was awarded the highest possible three-star FNG seal rating by the Forum for Sustainable Investments trade association for the third year in a row last year, for example, is Wartsila. The company is a global leader in sustainable solutions for the marine sector. At the same time, it offers storage and other balancing solutions for the energy sector. For example, Wartsila supplies highly efficient engines for the marine industry. These feature high tolerance to various fuels (including hydrogen). This will be crucial when people start ordering the next generation of ships.
Disclaimer: The information in this document is not binding. Statements in this document should not be understood as an offer, recommendation or solicitation to invest in or sell UCITS funds, hedge funds, securities or other products offered by DNB Asset Management or any other company within DNB Group or any other financial institution.
All information reflects the current assessment of DNB Asset Management, which is subject to change without notice. DNB Asset Management does not guarantee the accuracy and completeness of the information. This information does not take into account the individual investment objectives, personal financial situation or specific requirements of an investor. DNB Asset Management does not accept any responsibility for losses incurred on investments made on the basis of this information. Our general terms and conditions can be found on our website www.dnbam.com.
Last updated:
Share: