Opportunities in the Hydrogen Sector: How to Strategically Invest in Green Hydrogen in 2024

The transition toward sustainable energy sources is accelerating investments in clean technologies, and hydrogen emerges as an undisputed protagonist. As governments advance in environmental regulations, companies across various sectors – from automotive manufacturers to industrial gas suppliers – are strategically positioning themselves in this industry. But how to effectively invest in green hydrogen when the sector encompasses multiple players with radically different business models?

The complex reality of investing in green hydrogen

Unlike traditional commodities like oil with its Brent benchmark, hydrogen lacks direct listing on stock markets. This means that investing in green hydrogen involves selecting specific companies involved in different stages of the production chain: fuel cell manufacturing, liquid hydrogen distribution, or development of hydrogen-powered vehicles.

Specialized ETFs like Global X Hydrogen (HYDR) and Defiance Hydrogen (HDRO) aim to group these opportunities, although the reality is that each company operates under completely different dynamics. Let’s take two extreme cases: Linde is a global industrial gases producer, while Toyota is a diversified automaker. Both participate in the hydrogen sector, but their growth drivers are different.

Key players in hydrogen: Business profiles

FuelCell Energy specializes in power generation systems using fuel cells. Its model combines renewable production with carbon capture, positioning it as a developer of critical technology for future energy infrastructure.

Fusion Fuel Green takes an integrative approach: combining solar energy with storage via hydrogen. This sets it apart as a company solving one of the biggest challenges of renewables: energy intermittency. Its proposal is particularly relevant for critical installations requiring 24/7 supply.

Linde, as the world’s largest producer of liquid hydrogen, functions as an essential supplier. Its global scale and sector diversification make it less volatile, but it also means hydrogen is just one line of its portfolio.

Toyota and Hyundai represent divergent automotive bets. Toyota aims for a dual strategy: electric vehicles with batteries and hydrogen-powered vehicles for specific segments. Hyundai, with its ix35 fuel cell, was a pioneer in mass production of vehicle cells since 2013, demonstrating sustained commitment to the technology.

Hyzon Motors seeks to democratize hydrogen cells through low-cost designs, targeting heavy transportation where hydrogen has clear technical advantages over batteries.

Daimler/Mercedes builds buses and commercial trucks with hydrogen, exporting mechanical expertise to the clean vehicle sector.

Why hydrogen occupies space in investment portfolios

The mechanism is simple but powerful: hydrogen + oxygen in a fuel cell = electricity + heat + water. No CO2 emissions. For heavy vehicles – buses, freight trucks – this solves limitations faced by lithium batteries: reduced range and lack of charging infrastructure.

The applicability goes beyond transportation. Hydrogen energy storage can stabilize power grids fed by renewables, allowing solar or wind farms to “store” production during peak hours for release when demand exceeds generation.

This potential explains why governments and private initiatives allocate massive resources: transportation accounts for one-third of global CO2 emissions. Replacing internal combustion fleets with clean vehicles is an urgency, not a trend.

The paradox of investing in green hydrogen: Potential vs. Uncertainty

The advantages are clear: greater vehicle autonomy than conventional EVs, zero emissions, relatively accessible production, an ideal complement to renewable energies. The disadvantages lie in infrastructure: costly and complex transportation, scarcity of charging stations, still immature technology, unresolved technical limitations.

This is where the investor’s dilemma resides. The hydrogen industry is exponentially more fragmented than oil. While oil has clear producers and refiners, hydrogen spans multiple verticals: technology companies, gas suppliers, automakers, battery developers. Some will lead the transition; others will fail with less viable solutions.

Toyota and Hyundai seem like safer bets precisely because they do not depend solely on hydrogen. Both invest simultaneously in EVs, hybrids, and other technologies, diversifying risk. In contrast, companies specialized in fuel cells face greater volatility: hydrogen’s success is their success, but also their only bet.

Perspective 2024-2030: Is it feasibly profitable?

Profitability exists, but must be evaluated company by company. Most sector leaders have experienced robust stock performance, though for mixed reasons.

The macro catalyst is undeniable: climate change accelerates environmental regulations, governments fund hydrogen infrastructure (European clean hydrogen plans, Japanese hydrogen economy initiatives, US investments). This creates demand.

But demand ≠ guaranteed profitability. Viability depends on: 1) whether your specific company captures market share, 2) whether it achieves sustainable operating margins, 3) whether it surpasses technological competition without disruptive surprises.

Green hydrogen is not a single bet, but a portfolio piece

Evidence suggests that investing in green hydrogen prospers when integrated into diversified companies. Toyota and Hyundai grow because hydrogen is a catalyst, not the foundation. Linde prospers because it is an indispensable supplier without dependence on hydrogen vehicle success.

Companies solely focused on fuel cells – like Hyzon Motors – offer greater upside potential but extreme volatility. They are growth bets, not stability bets.

The conclusion: investing in green hydrogen is viable, but requires surgical selectivity. It’s not about buying “hydrogen” as a commodity. It’s about identifying which hydrogen-interest company has a defensible business model, diversified income streams, and proven technological leadership. The uncertainties remain (infrastructure, regulation, competition with batteries), but the strategic role of hydrogen in the energy transition is no longer speculative: it is an emerging reality.