The boom in clean hydrogen is picking up pace, according to investment bank Goldman Sachs. “The clean hydrogen revolution continues to accelerate,” analysts at the bank said in a Feb. 13 note. “We have reflected this in our hydrogen forecasts, almost tripling our base case scenario to 2030, vs. our initial estimates from last year (Feb 4, 2022).” The bank pointed to a few factors driving clean hydrogen, including positive regulation gaining pace with the U.S. Inflation Reduction Act (IRA) at the forefront, and new initiatives to create a global seaborne market (hydrogen can be transported in liquid form by ships). The capacity of the fuel — one alternative as much of the world looks to shift away from fossil fuels — is set to increase, with the majority of these additions set to come from Europe, Asia and Australia in the near term, according to the bank. However, there is also “strong upside” from the U.S. and Canada as the IRA incentives will drive large-scale projects in those regions, said Goldman. When hydrogen burns, it generates energy in the form of heat, with water as a by-product. That means energy created from hydrogen generates no atmosphere-warming carbon dioxide, although transforming hydrogen into a useful format requires energy — and that energy is not necessarily renewable. There are a few types of hydrogen . The cleanest type — green hydrogen — uses energy from renewable sources, while so-called blue hydrogen is produced from natural gas. Stock picks Goldman named the following buy-rated stocks as ways to play the theme: Ceres Power The bank gives this stock a price target of £6.70 (£8.03) — or 50% potential upside, saying it has adopted a “differentiated, high margin” model. The bank said that Ceres’ partnerships are set to unblock royalty revenue streams, as its partners such as Bosch and Doosan Fuel Cell are “notably” scaling up in the hydrogen and clean tech space. Industrie De Nora Goldman said De Nora is a key beneficiary of the IRA incentives given its high exposure to U.S. sales. “De Nora is now emerging as a key enabler of the green hydrogen economy, the next critical pillar of its growth strategy,” the bank said. It added that three factors are driving the company: its proven intellectual property and differentiated position on the supply chain which “sets it apart” in the green hydrogen industry; its “resilient profitability”; and its strong balance sheet, which makes it resilient even in a recession. Goldman gave the stock a price target of 24 euros ($25), or potential upside of nearly 30%. — CNBC’s Michael Bloom and Catherine Clifford contributed to this report.
