Sustainability Matters Jun/Jul 2022

Page 8

Nanuk Asset Management (Nanuk) has detailed in a recent webinar presentation to Australian financial advisers the challenges facing green hydrogen that limit its current investment potential.


reen hydrogen is hydrogen generated by renewable energy or from low-carbon power and is seen as being crucial to achieving net zero

carbon emissions. Australian asset manager Nanuk invests

in industries related to global sustainability and resource efficiency. Green hydrogen is an area of focus for the company, but currently not an area of significant investment. The Chief Investment Officer of Nanuk, Tom King, said his company’s research is directed towards identifying sustainable businesses that are both benefiting from evolving industry trends and have attractive investment return potential. “If the world is to reach net zero emissions, green hydrogen will eventually play a significant role, but similarities with other sustainable technologies suggest that it is unlikely to deliver strong investment returns,” King said. “While interest in green hydrogen has increased significantly, the high costs of producing and transporting green hydrogen and the lack of infrastructure render green hydrogen uneconomic today without significant subsidies.” According to King, “At present, green hydrogen is substantially more expensive when compared to hydrogen that is produced from fossil fuels, and substantially more expensive as a source of energy than natural gas. Achieving widespread adoption relies on very significant cost reduction over time. “Furthermore, the capital intensity and relatively low barriers to entry mean that

Green hydrogen Critical to global decarbonisation but a challenging investment

most companies involved in the hydrogen value chain are unlikely to live up to high expectations for future growth and profitability. In the short term the most likely beneficiaries of government funding programs for hydrogen projects are likely to

8 Sustainability Matters - Jun/Jul 2022