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The green energy revolution is upon us and investors are making the most of this emerging trend. Yet, there is confusion on whether to bet on electric vehicles through Tesla (which is currently facing margin issues) or on some clean energy ETFs (that are not doing well on bourses this year).
Amid the clamor for cleaner fuel sources, hydrogen has emerged as a key player. As this sector continues to develop, investors are becoming increasingly interested in hydrogen stocks and ETFs. The pack has seen momentum in the past month.
TheGlobal X Hydrogen ETF (HYDR - Free Report) , the Direxion Hydrogen ETF (HJEN - Free Report) and the Defiance Next Gen H2 ETF (HDRO - Free Report) are among the popular ETF choices. The trio have delivered about 8.2%, 5.5% and 4% returns, respectively, in the past month (as of Jul 21, 2023).
These ETFs provide a mix of both established and emerging hydrogen companies, giving investors a comprehensive view of the market. Below, we explore the allure of investing in hydrogen and how ETFs can serve as an effective vehicle for doing so.
Why Hydrogen?
Clean Emissions
Hydrogen, when used as a fuel source, only emits water and heat, making it a clean energy alternative. When combusted or used in fuel cells, it produces water as the only by-product. This is in stark contrast to fossil fuels, which emit harmful greenhouse gases, leading to global warming and adverse health effects.
Cheaper Than Electric Vehicles
Hydrogen fuel cell vehicles are powered by converting hydrogen gas into electricity through a fuel cell. Hydrogen is supposedly cheaper than electric vehicles. Its cost effectiveness lies in the production and distribution of hydrogen itself.
While the initial cost of manufacturing hydrogen fuel cells is higher than battery packs used in electric vehicles, the infrastructure required for generating and dispensing hydrogen can be less expensive and more scalable than the infrastructure needed for widespread electric charging stations.
High Energy Density
Hydrogen possesses a high energy density by weight, making it especially potent for applications where weight is a critical factor, such as in aerospace and certain transportation sectors.
Versatility in Usage
Hydrogen can be used across various sectors. Beyond its potential in transportation (like cars, buses and trains), hydrogen can be integrated into power generation, heating and as a raw material for certain industries. Its ability to store and release energy also makes it a potential solution for grid storage, helping to balance the intermittent nature of renewable sources like wind and solar.
Infrastructure Development
Many countries are making substantial investments in hydrogen infrastructure. This includes building fueling stations for hydrogen-powered vehicles and integrating hydrogen into existing power grids. Europe, in particular Germany, is pushing for hydrogen use, and U.S. government subsidies are opening up growth prospects for hydrogen as an industry. The U.K. is also incentivizing hydrogen companies to push for rollout and increased production (read: Government Assistance on U.S. Clean Energy: ETFs to Win).
Major Players
Companies like Plug Power, Ballard Power Systems and FuelCell Energy have been at the forefront of the hydrogen revolution. Their stock prices have seen volatility, but their pioneering work in this sector offers a vision of hydrogen's long-term viability.
Emerging Leaders
With the hydrogen market still in its infancy, newer players are emerging, each bringing innovative solutions to harness the power of hydrogen. As these startups mature, they could offer lucrative investment opportunities.
ETFs: Diversifying Your Hydrogen Investment
For those wary of betting on individual stocks, ETFs offer a way to invest in the broader hydrogen market. These funds hold a diversified portfolio of stocks related to hydrogen, offering investors exposure to the sector's growth without the risk of individual stock volatility.
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Worried About Tesla's Margins? Try Hydrogen ETFs
The green energy revolution is upon us and investors are making the most of this emerging trend. Yet, there is confusion on whether to bet on electric vehicles through Tesla (which is currently facing margin issues) or on some clean energy ETFs (that are not doing well on bourses this year).
Amid the clamor for cleaner fuel sources, hydrogen has emerged as a key player. As this sector continues to develop, investors are becoming increasingly interested in hydrogen stocks and ETFs. The pack has seen momentum in the past month.
The Global X Hydrogen ETF (HYDR - Free Report) , the Direxion Hydrogen ETF (HJEN - Free Report) and the Defiance Next Gen H2 ETF (HDRO - Free Report) are among the popular ETF choices. The trio have delivered about 8.2%, 5.5% and 4% returns, respectively, in the past month (as of Jul 21, 2023).
These ETFs provide a mix of both established and emerging hydrogen companies, giving investors a comprehensive view of the market. Below, we explore the allure of investing in hydrogen and how ETFs can serve as an effective vehicle for doing so.
Why Hydrogen?
Clean Emissions
Hydrogen, when used as a fuel source, only emits water and heat, making it a clean energy alternative. When combusted or used in fuel cells, it produces water as the only by-product. This is in stark contrast to fossil fuels, which emit harmful greenhouse gases, leading to global warming and adverse health effects.
Cheaper Than Electric Vehicles
Hydrogen fuel cell vehicles are powered by converting hydrogen gas into electricity through a fuel cell. Hydrogen is supposedly cheaper than electric vehicles. Its cost effectiveness lies in the production and distribution of hydrogen itself.
While the initial cost of manufacturing hydrogen fuel cells is higher than battery packs used in electric vehicles, the infrastructure required for generating and dispensing hydrogen can be less expensive and more scalable than the infrastructure needed for widespread electric charging stations.
High Energy Density
Hydrogen possesses a high energy density by weight, making it especially potent for applications where weight is a critical factor, such as in aerospace and certain transportation sectors.
Versatility in Usage
Hydrogen can be used across various sectors. Beyond its potential in transportation (like cars, buses and trains), hydrogen can be integrated into power generation, heating and as a raw material for certain industries. Its ability to store and release energy also makes it a potential solution for grid storage, helping to balance the intermittent nature of renewable sources like wind and solar.
Infrastructure Development
Many countries are making substantial investments in hydrogen infrastructure. This includes building fueling stations for hydrogen-powered vehicles and integrating hydrogen into existing power grids. Europe, in particular Germany, is pushing for hydrogen use, and U.S. government subsidies are opening up growth prospects for hydrogen as an industry. The U.K. is also incentivizing hydrogen companies to push for rollout and increased production (read: Government Assistance on U.S. Clean Energy: ETFs to Win).
Major Players
Companies like Plug Power, Ballard Power Systems and FuelCell Energy have been at the forefront of the hydrogen revolution. Their stock prices have seen volatility, but their pioneering work in this sector offers a vision of hydrogen's long-term viability.
Emerging Leaders
With the hydrogen market still in its infancy, newer players are emerging, each bringing innovative solutions to harness the power of hydrogen. As these startups mature, they could offer lucrative investment opportunities.
ETFs: Diversifying Your Hydrogen Investment
For those wary of betting on individual stocks, ETFs offer a way to invest in the broader hydrogen market. These funds hold a diversified portfolio of stocks related to hydrogen, offering investors exposure to the sector's growth without the risk of individual stock volatility.
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)