If you’re doing some shopping this weekend, you may want to know that the newest French fashion is not a certain style of high-cut jeans or low-cut tops, nor is it a dazzler from the world of haute couture… or haute cuisine.
But it is a fashion-forward element.
In fact, it is the world’s No. 1 element: Hydrogen.
I know it won’t fit in your fall wardrobe, but you should find this pretty attractive: The French are spending billions of euros to blanket the country with avant-garde green hydrogen infrastructure, and many other European countries are pursuing similar ambitions.
Even the U.S. is embracing this fashionable new “mode de cleantech”…
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Here Comes the Money
The French initiatives are as grand and lavish as the Palace of Versailles. In one particularly notable example, a small company that makes hydrogen products received a grant from the French that was so massive it equaled half the company’s market value.
On Sept. 28, McPhy Energy S.A., a French company that specializes in hydrogen production and distribution equipment, announced it would receive a €114-million grant to build a gigafactory that produces industrial-scale electrolyzers for converting water into hydrogen fuel. On that date, the company’s market value was just €230 million.
Also on Sept. 28, the French government announced that it would invest €5.3 billion alongside private companies like Alstom SA and Arkema S.A. to build 10 additional factories that will manufacture products like electrolyzers, hydrogen tanks, fuel cells, and hydrogen-powered vehicles and trains.
French Prime Minister Élisabeth Borne promises these sizable investments will not be the last. “As soon as costs come down and French supply is available,” she says, “we will move on to the second stage of our strategy, which is the massive deployment of hydrogen in all industries and across the country.”
To make that dream a reality, the French government has earmarked an additional €4 billion of support for the hydrogen industry.
Faster than you can say “escargot,” the U.S. revealed a billion-dollar hydrogen strategy of its own.
On the same day France announced its new hydrogen investments, the U.S. Department of Energy published a 100-page document outlining plans for deploying $9.5 billion in grants over four years, with the ambition of producing 10 million metric tons of green hydrogen per year (MtH2/year) by 2030, 20 Mt-H2/year by 2040, and 50 Mt-H2/year by 2050.
As part of the grand design, the DOE released a funding opportunity of $6-$7 billion to develop six to 10 hydrogen hubs across the country.
A consortium of four midwestern states wasted no time tapping into the billion-dollar opportunity. The governors of North Dakota, Minnesota, Montana, and Wisconsin signed a memorandum of understanding (MOU) on Oct. 7 to develop a regional clean hydrogen hub. This newly proposed Heartland Hydrogen Hub would include clean hydrogen projects from various energy sources across the four participating states.
A Burgeoning Megatrend
These initiatives and projects are just a taste of what’s to come. And we Americans are not the only ones who are embracing this new French fashion; some 34 countries around the world have implemented national hydrogen strategies… and more are on the way.
Because of ambitious worldwide efforts like these, Bloomberg New Energy Finance predicts investment in low-carbon technologies will outpace fossil-fuel spending by 4-to-1 through the end of the decade, and the ratio will continue to grow in the years beyond.
Already in the current year, clean-energy investment will total about $815 billion, which would be just shy of this year’s $900 billion investment in fossil-fuel projects.
Looking farther down the road, BNEF expects total energy-supply investment over the next three decades to range from $40 trillion to $114 trillion.
Even the low end of that wide range would be a lot of dollar bills. Almost no industry measures its investment outlook in trillions of dollars, and even fewer measure it in tens of trillions of dollars.
The billions being spent to develop hydrogen as a fuel source are just one part of the global transition from “old energy” to “new energy.” This transition is truly a megatrend, perhaps the largest of the next few decades.
One of my favorite investments on this transition is one of the world’s biggest renewable energy companies… and it is also an oil company. That may sound confusing, but I believe the company’s identity is as clear as could be. It is a fashion-forward, energy-transition company. The company’s management understands both what has been and what will be, and intends to maximize profit from both. (And it pays a hefty dividend.)
That’s a good strategy for us investors as well. The ponies running this race might shift around in the pack from year to year, but many of them will handsomely reward the bets investors are placing on them today.
Regards,
Eric
P.S. My ideal “energy transition” recommendation is brand-new, so you haven’t missed anything yet. But because I expect this play to deliver market-beating gains in the future – albeit at a more modest pace considering the current bear market – getting in now is crucial. Learn how you can gain access to this recommendation – and be first in line to grab my future picks – by clicking here.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
