Why Are Hydrogen Stocks Heating Up Today?

  • Hydrogen stocks such as Plug Power (NASDAQ:PLUG) and FuelCell Energy (NASDAQ:FCEL) are surging today.
  • This move comes as an accord between Canada and Germany was signed, looking to create a “transatlantic supply chain for hydrogen.”
  • Proponents of green hydrogen point to infrastructure as a big need, which this agreement appears to address in a big way.
hydrogen stocks - Why Are Hydrogen Stocks Heating Up Today?

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Today, investors are intensely focusing in on hydrogen stocks. A range of hydrogen-related companies are surging, with Plug Power (NASDAQ:PLUG) and FuelCell Energy (NASDAQ:FCEL) each gaining around 10% at their intraday highs.

A number of catalysts appear to be driving these outsized moves in hydrogen stocks. Notably, a potentially significant deal between Canada and Germany, which involves the shipping of green hydrogen to Europe’s biggest economy, has investors excited. Canadian Prime Minister Justin Trudeau signed a non-binding partnership with German Chancellor Olaf Scholz on Tuesday. This deal is expected to commence in 2025, with a five-year window of commitment.

The goal of this accord is simple: To create a “transatlantic supply chain for hydrogen.” However, for investors, this significant agreement between G7 countries has created more excitement.

Let’s dive into why that may be the case today.

Hydrogen Stocks Soar on Big Catalyst Today

Energy security in Europe, and North America for that matter, has become a much more pressing issue of late. The Russian invasion of Ukraine has forced countries to re-think their future power supply sources. For Canada and Germany, green hydrogen is a power source that’s growing in importance as a result.

This deal is notable, as Canada remains a significant oil exporter globally. This transition to green hydrogen could pave the way for a re-tooling of the country’s energy supply and help ease energy supply constraints in Europe simultaneously. The move away from fossil fuels toward more sustainable forms of energy is needed. Accordingly, this partnership could be more symbolic than anything, though there is some big-time upside for North America and Europe should this deal result in meaningful investments in infrastructure.

For hydrogen to be viable from a long-term perspective, significant investments in infrastructure are needed. This accord appears to pave the way for capital to get routed toward green hydrogen production and transport. That’s a big win for hydrogen players in North America and Europe, with Plug Power and FuelCell Energy being touted by the market as potential winners.

Of course, a lot can happen between now and 2025. This deal is one that’s non-binding, and therefore could be mostly symbolic. But it’s a sign that two major economies are shifting their energy policy in a big way. Accordingly, for investors in hydrogen stocks, there’s a lot to like about this news.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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