The answer to some of these questions could come from a well-know, but underappreciated source: Hydrogen.
Hydrogen has exploded on to the clean energy scene recently and is one of the most exciting ongoing developments. Using renewable energy to create ‘green’ hydrogen results in a fuel that produces no potent greenhouse gas emissions when used, and has the potential to decarbonise harder to reach sectors such as transport, steel manufacturing and other heavy industry.
Governments need to invest heavily to provide the initial spark for the industry. Without government support for hydrogen, private capital is not likely to make any meaningful allocation. So, access to early stage hydrogen investment opportunities seems easiest through public equity markets for now. In terms of government backing, the US Department of Energy’s announcement in June that it would spend $100m over five years to advance research was blown out of the water by announcements from Germany, Saudi Arabia and China that they would each be establishing multi-billion dollar hydrogen strategies.
The UK’s government has been hounded by academics, unions and industry leaders to support the area more given that Scotland, in particular, is already at the forefront of green hydrogen production and end-to-end solutions, but there appears to be some hesitation in attempting to catalyse the current position. In short, it seems as though politics and vested interest groups have been adding their own chapters to the rapidly developing hydrogen story.
European governments, in particular, should have some capacity to support hydrogen as they remove subsidies from wind and solar energy, which produce lower-cost electricity than fossil fuels. In the UK, LCP’s Energy Analytics team were quick to notice that energy production from renewable sources exceeded demand at points in May, resulting in negative energy pricing. Renewables paid the market to take their energy in order to receive their subsidies. Negative pricing is expected to increase in the future as the share of renewables in the power generation mix grows.