While the hydrogen economy, or the process of producing hydrogen and using it as a fuel, and replacing fossil fuels, largely remains a concept that has only gained a little commercial traction, this could be set to change as climate change is at the core of President Joe Biden’s agenda. Hydrogen could help to cut carbon emissions significantly, as it can be used not just for transportation and electricity generation – two key focus areas of current renewable plans, but also for applications such as heating and industrial purposes such as cement and steel manufacturing. Our theme of Hydrogen Economy Stocks, which includes the stocks of U.S. listed companies that sell hydrogen fuel cells, renewable energy equipment, and supply hydrogen gas has rallied by about 26% since early January. (see our update below for a more detailed look at how these companies fit into the hydrogen space) A good portion of the gains came on Tuesday after the U.S. Department of Energy’s Office of Fossil Energy announced plans to make $160 million in federal funding available to Improve Fossil-Based Hydrogen Production, Transport, Storage, and Utilization. Although the funding is small, in the larger scheme of things, it likely gives investors confidence that the government will back the hydrogen industry.
[Updated 12/11/2020] Bloom, Cummins, First Solar
Interest in clean energy stocks has soared this year, driven by low-interest rates, improving economics, and the election of Democrat Joe Biden – who has proposed to spend as much as $2 trillion on fighting climate change – to the U.S. presidency. While solar and electric vehicle stocks have been the most high profile winners, another theme that appears to have caught investors’ interest is the concept of the “hydrogen economy” or the use of hydrogen as a fuel for transportation and other energy requirements, replacing fossil fuels.
Hydrogen burns much cleaner than petroleum-based fuels and can be produced using just water and energy or from hydrogen-rich gases such as methane. Hydrogen is also seen as a means of storing excess renewable electricity – as the electricity can be used to run a process of electrolysis, which converts water into hydrogen. Our theme of Hydrogen Economy Stocks includes the stocks of U.S. based companies that sell fuel cells, renewable energy equipment, and supply hydrogen gas. Below is a bit more about the companies in our theme and how they fit into the broader picture of the Hydrogen Economy.
FuelCell Energy (NASDAQ
Air Products and Chemicals
First Solar is the largest U.S.-based solar panel manufacturer. Solar players could also stand to gain from the hydrogen economy as hydrogen can be produced from water by a process of electrolysis, using solar-generated electricity. Solar power typically sees intermittent production and supply-demand mismatches, so excess power could be “stored” in hydrogen. The stock is up 55% year-to-date.
Cummins (NYSE: CMI) – an industrials company best known for its engines and power generation products – has been working on hydrogen-based technologies for almost two decades. The company acquired Hydrogenics, a leading Canadian hydrogen fuel cell player last year. The stock is up 23% year-to-date.
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