Investors see green hydrogen as promising as China signals support

There are more and more talks about green hydrogen. Declared by the world community, the target of decarbonization of the economy and the gas industry, creates opportunities for interaction of many countries that go far beyond traditional gas supplies. It could include cooperation between the parties at a new technological level - in the production and use of pure hydrogen obtained from natural gas without CO₂ emissions. Chinese investors see future for further gains in companies making equipment needed to produce or use green hydrogen, an easy and clean energy source most governments are betting will help them achieve mid-century climate goals. China is one of the leading parties in this matter.

The sector has so far offered a haven from authorities drastic measures on technology and education companies that Beijing criticizes for growing inequality and increasing the financial risks. As China tightens up its regulation and oversight, industries stimulating growth through innovations and technologies are seen getting a support.

"Hydrogen power is one of the decisive factors to achieve carbon neutrality," said Li Weiqing, fund executive at JH Investment Management, which acquired the shares of LONGi Green Energy Technology Co. due to the organization's hydrogen investments. According to Li Weiqing, the sector will gain "strong political support".

Despite the fact of the jump in hydrogen-related stocks earlier in August that encouraged shares of companies like fueling-station equipment maker Houpu Clean Energy Co. and fuel cell engine maker Zhongshan Broad Ocean Motor Co. has stabilized with significant growth potential, in accordance to Li.

Xiaotin Wang, a San Francisco-based BloombergNEF analyst who pointed to the high cost of such an approach, says government supports for clean hydrogen is unlikely to come from direct subsidies. On the contrary, Beijing will support large state-backed energy companies.

Nonetheless, the sector benefits as local governments, including Beijing and Inner Mongolia, implement strategies to develop green hydrogen companies to demonstrate compliance with net-zero targets. By the end of 2022, China will account for about two-thirds of the world's electrolysers, the equipment used to produce hydrogen by separating water, based on BNEF research.

More than 20 provinces and 40 cities in China have published trillions of yuan worth of hydrogen energy development plans, according to the state magazine Economic Daily. The country delivered 558 fuel cell buses in the first six months of 2021, according to BNEF, compared with 17,000 battery electric buses deployed in the second quarter of this year alone.