Top 5 Best Green Hydrogen Stocks to Watch in 2023
If you are looking to invest in or trade green hydrogen stocks, let us provide you with further information on the topic in order to make an educated decision.
Hydrogen is the most abundant element in the Universe. It’s also the simplest, consisting of a single proton and a single electron - which explains why it’s so common.
Hydrogen has long been lauded as the fuel of the future. And with a number of countries joining the US and the EU in the pledge to cut greenhouse gas emissions by 30% by 2030, this future is actually closer than it seems.
Green hydrogen will play an important part in this, both as an emission-free fuel and also as a green energy source to decarbonize other economic sectors.
This article will take a deeper dive into green hydrogen, presenting some of the market-leading companies and the best green hydrogen stocks to watch for 2023.
Please keep in mind as a general disclaimer, the stocks mentioned are subjective and based on the author’s opinion, which may vary based on the trader.
Table of Contents
What are Green Hydrogen Stocks?
In its Green Hydrogen Report from 2020, Goldman Sachs went as far as describing green hydrogen as a “once-in-a-generation opportunity”. But what exactly makes green hydrogen stocks a potential investment option?
Before we get started with green hydrogen stocks, it’s important to understand more about the hydrogen industry itself. There are different ways to produce hydrogen. While the gas itself is considered a green fuel, its production often creates a significant carbon footprint.
Gray hydrogen, which is the predominant method in the industry, is produced using natural gas. This process releases carbon dioxide back into the atmosphere. While using hydrogen as fuel solves part of the issue, its production creates another problem. There is also blue hydrogen, which employs carbon capture and storage methods to somewhat offset the impact of its greenhouse gas emissions.
This is where green hydrogen comes in. Just as the name suggests, its production results in zero or insignificant greenhouse gas emissions. It employs renewable energy to power the process of water electrolysis, from which hydrogen is produced.
With this brief explanation, we can move to the next topic: what are green hydrogen stocks? Quite simply, we are talking about investing in green hydrogen companies that have already established themselves in the stock market. As countries continue to look for clean energy sources, the green hydrogen market could grow significantly in the not-so-distant future.
Should I Buy Green Hydrogen Stocks?
The green hydrogen stock market is undeniably growing in popularity. There are many different reasons behind it. One is the increased importance of environmental, social and governance (ESG). Hydrogen is the fuel of the future, and green hydrogen production definitely becomes a priority in this scenario.
Another reason is the green hydrogen industry itself. As national governments continue to look for ways to reduce greenhouse gas emissions, clean hydrogen production is at the top of the list. In 2021, the US Department of Energy announced a $52.5 million fund for 31 projects with the goal of advancing clean hydrogen technologies. The green hydrogen market may continue to grow.
On the other hand, as with all industries, green hydrogen stocks carry an amount of risk which every trader needs to be aware of. They will not fit into every trader’s portfolio and individual circumstances must be considered.
Additionally, new or uprising stocks carry the risk of being highly volatile, which is a crucial aspect to consider before investing or trading green hydrogen stocks.
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Who Is The Largest Producer of Green Hydrogen?
In the future, most countries will become “hydrogen societies”, with clean gas moving to replace fossil fuel as the primary energy source. In this race to become the world’s first hydrogen society, many countries have already turned their sights to green hydrogen, adopting renewable energy to produce gas.
While moving away from grey hydrogen is a long process, the following countries have taken significant steps towards this goal:
- China: the biggest hydrogen producer and consumer market in the world, China has, unsurprisingly, also taken the lead in the move toward green hydrogen. Sinopec, the country’s government-controlled energy company, announced plans to produce 500 million tonnes of green hydrogen by 2025. Sinopec recently launched its first green hydrogen plant in Ordos, Inner Mongolia. It is capable of producing 20,000 tonnes of hydrogen per year.
- India: in 2021, India announced its first foray into green hydrogen. Using solar energy as the primary source, the country’s leading energy companies intend to produce 400,000 tonnes of hydrogen in a year by 2030.
- Japan: back in 2017, then Prime Minister Shinzo Abe announced plans to turn Japan into the world’s first hydrogen economy. However, the country has some obstacles to overcome due to natural restrictions. Japanese companies produce green hydrogen overseas as the country continues its push toward hydrogenification.
- South Korea: the country has some ambitious plans for a hydrogen-based economy. In 2020, South Korea revealed the Clean Hydrogen Energy Portfolio Standards. Then, in 2021, the country outlined the standards for green hydrogen certificates. South Korea has also moved to promote the use of hydrogen vehicles, charging stations and fuel cells.
- United States: the US sits only behind China in hydrogen consumption. Texas is the largest hydrogen producer in the US territory. California, New York and Oklahoma also have some significant green hydrogen projects lined up.
- European Union: the EU plans to become the world’s leading green hydrogen producer. Initiatives such as the European Clean Hydrogen Alliance have already been established to help achieve this ambitious goal.
What Are The Best Green Hydrogen Stocks UK?
1. Linde PLC (LIN)
Linde is a multinational company based in the UK but originally from Germany. It is part of the Hydrogen Council and is also heavily invested in hydrogen, including vehicles and wind plants for clean production. In fact, Linde PLC is the world’s largest industrial gas company by both market share and revenue.
- Stock has steadily risen since 2021.
- Dividends have increased annually for over 25 years.
- Relatively low yield
Cummins has over a century of history. Traditionally a fossil fuel company, it has expanded its portfolio to include hydrogen in recent years. Cummins is set to transition from grey to green hydrogen as well.
- Shares have had significant gains over the past two years
- Move to green hydrogen promises an increase in revenue
- Fossil fuels are still its primary focus
The Toronto-based company owns a wide range of renewable energy facilities. While not a green hydrogen company per se, Brookfield Renewable provides its clean energy to other companies responsible for hydrogen production.
- Despite not producing hydrogen, Brookfield Renewable indirectly reaps the rewards from the industry.
- Offers a 3.58% dividend yield to investors.
- Shares took a bit of a dive and have gone down by 31% since January 2020.
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What Other Green Hydrogen Stocks are Good to Watch?
There are more alternatives for green hydrogen stocks UK aside from the three companies mentioned above.
iShare Global Clean Energy is an exchange-traded fund (ETF) with exposure to green hydrogen companies. The fund tracks the performance of companies in the clean energy industry, but crucially also takes their respective carbon footprint into account.
- Has gradually increased the number of holdings.
- A serious commitment to the clean energy industry.
- Prices went down by 35% in a 12-month period.
Plug Power is an American company that develops hydrogen fuel cells with the aim of replacing battery power in industrial equipment.
- Saw back-to-back increases of 115% in 2019 and 1,000% in 2020.
- Recently acquired the United Hydrogen Group and Giner ELX.
- High price-to-sales ratio and negative cash flow.
How to Invest or Trade in Green Hydrogen Stocks
If you are looking for ways to invest or trade in green hydrogen stocks, then Admirals is a possible option for you. Green hydrogen is the fuel of the future, and is a fast-growing market with a significant increase in popularity, making it an interesting investment.
Naturally, there are no guarantees - as is the case for any other market. However, it’s equally undeniable that green hydrogen stocks have valid potential.
You can register for a live account with Admirals and start trading CFDs or investing directly with an Invest.MT5 account.
Alternatively, you can try to practice trading with a risk-free demo trading account.
What stock is the Tesla of green hydrogen?
Plug Power Inc (PLUG) is quickly becoming one of the most popular green hydrogen stocks, gaining the title publicly as "the Tesla of hydrogen", given it is moving to become the production leader in EU, Asia and US for green hydrogen.
What is the best green hydrogen stock?
While the answer is subjective, two of the main leaders in the green hydrogen vertical appear to be Plug Power Inc (PLUG) and Bloom Energy Corporation (BE).
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