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CERAWeek: Hydrogen fuel pioneer sees progress, challenges

05 March 2021 Kevin Adler

One of early backers of hydrogen as a transportation fuel told CERAWeek by IHS Markit on 5 March that he is encouraged by the surging attention for the fuel, but "the roadmap is unclear."

Daniel McCarthy, now with National Bank of Canada, was on the investment team that helped to bring Stuart Energy public in the early 2000s, with the intention of providing hydrogen for fuel cell vehicles.

When asked by Raoul LeBlanc, IHS Markit vice president, energy, about his experience in "Hydrogen 1.0" and how it compares to today, McCarthy remarked that he had recently looked at the prospectus issued by Stuart Energy when it went public 20 years ago. That information for investors forecast advances in fuel cells for vehicles; strong government support for research and development, and then commercial scaleup; and a finite availability of fossil fuels. "We were oh-for-three on what we thought would happen," he said. "Fuel cells didn't develop as quickly as we expected, there were no emissions regulations [to promote their use] … and we had the shale revolution."

But McCarthy said: "Today it seems very different to me. [National Bank of Canada] had a hydrogen conference in December … and it was the most attended event ever in terms of participation by institutional investors."

Those institutional investors are still wary about emerging technologies, but they're asking a lot of questions. Meanwhile, McCarthy said that the investing public is clearly eager to climb aboard the energy transition.

As an example, he said that his bank was involved in two public stock offerings in the last six months for Ballard Power, a Vancouver, Canada-based developer of fuel cells. The offerings raised US$960 million, and they "were 10 times oversubscribed," he said, meaning that demand to invest in Ballard far exceeded the share of the company it was seeking to sell.

Ballard's valuation shows the ups-and-downs that the sector has experienced, with it clearly on the upswing now, he said. Ballard had a market valuation of about $15 billion in 2000, but as the fuel cell future never arrived, McCarthy said its valuation fell to about $200 million. It's now back to about $12 billion. "They were in the desert a long time, but they plugged away at their technology," he said.

As for Stuart Energy, it's still in business as well, continuing to improve its electrolysis process. It's now known as Hydrogen Optimized.

Despite his optimism, McCarthy said that a number of things must be worked out to bring hydrogen into common use as a zero-carbon fuel. "Hydrogen still costs too much, and there's not enough production from electrolysis," he said. Electrolysis can produce hydrogen from water by splitting the hydrogen and oxygen molecules, thus generating emissions-free "green" hydrogen if the energy source for the process is renewable power.

Speaking more generally about the cleantech sector, McCarthy added, "Public investors are willing to invest their money.... But we just don't know where the industry is going … and don't know how long this cycle will last.… So, cleantech is coming, but my question is the rate of adoption."

Posted 05 March 2021 by Kevin Adler, Chief Editor


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