Solve the riddle of bringing down clean hydrogen production costs and improving purification membranes while persuading governments to either put up some cash or impose a carbon tax, and a $100 billion market awaits you by 2030, according to Linde Plc.
Hydrogen has been the world’s fastest growing molecule for a decade now. It’s currently a rapidly-evolving market: a Wild West of a landscape where many countries are taking different paths. That makes it difficult to predict how hydrogen will ultimately play out, according to Sanjiv Lamba, Linde’s chief operating officer.
“Time will tell,” Lamba told investors on a call.
Linde is evaluating more than 200 investment opportunities, some small, some mega. Hydrogen’s inflection point in terms of adoption will come when regulators take a view on a carbon tax or some other pricing mechanism, and production costs come down.
Although a long-term opportunity for Linde, hydrogen is expected to experience sector-leading growth as it will play a crucial role in the world’s required energy transition, said Anthony Manning, an analyst at Berenberg.
Should clean hydrogen hit the $100 billion forecast, that would still only equate to 1.5% of today’s hydrocarbon market, which stands at $6 trillion, according to Lamba. The industrial gas industry is always one of the largest consumers of power in any given location. While that heaps pressure on players to switch to renewable power sources, companies like Linde, Air Liquide and Air Products have the clout to negotiate with renewable electricity suppliers and even back sustainable energy projects in return for long-term supplies.
Linde currently gets 1/3 of its power from such sources. The company is tracking ahead of its ESG initiatives set in early 2020 and is preparing an update that will incorporate new goals, including for renewables.