Just as the Obama administration claimed back in 2009, fuel cell technology was over a decade away.

But that decade came and went.

Now, 14 years later, fuel cell technology is far more economical and scalable for commercial use.

The cost of FCVs have plunged over 65% over the last decade – especially for buses – on the back of innovations and production improvements.

The increased affordability for hydrogen powered FCVs now makes it a much more attractive fuel source for everyday use.

Because of this, the global FCV market is set to grow from $2.5 billion in 2022 to over $30 billion by 2032 – which is more than 25% compounded annually.

This rapid growth in FCVs has many tailwinds behind it.

Stricter vehicle emission regulations.

Government investments and subsidies in the development of FCVs and green hydrogen.

The growing adoption of passenger FCVs in Asia – especially Japan and South Korea.

The transition for companies shifting towards FCV’s which offer greater efficiency than electric vehicles – especially for long-haul and bulk transportation.

As costs have reduced for commercial use, different administrations around the world have set ambitious targets to increase the number of FCVs on the roads.

And that means more hydrogen is required to power these FCVs.

Companies And The “Smart Money” Are Diving Into Hydrogen

With governments pushing billions into green hydrogen infrastructure and investment, companies and venture capital (VCs) have already started shifting towards this new market.

For instance, VC firms invested $2.6 billion in 192 hydrogen startups last year.

Since 2014, the number of annual VC hydrogen deals has more than tripled as PE deal counts in hydrogen-related companies quadrupled.

Major international companies – struggling to reduce their carbon output – have already been striking green hydrogen deals left and right.

Last year, Amazon signed an agreement with Plug Power to supply 11,000 tons per year of green hydrogen for its transportation and building operations starting in 2025.

Meanwhile, around the same time, Walmart struck a deal with Plug Power to supply enough green hydrogen to help fuel as many as 9,500 machines across their distribution and fulfilment centers.

This is just the tip of the iceberg of companies investing in green hydrogen and FCVs.

And while this trend is set to accelerate amid decarbonization enforcement, hydrogen-related companies are getting huge amounts of government subsidies to make sure they can deliver.

Just last month, in July 2023, Nikola Corporation – a global leader in zero-emissions transportation and energy infrastructure – received $58.2 million in grants to support seven hydrogen refueling stations located along the California freight corridors.

Let’s Talk About California

California has spearheaded the push into hydrogen – subsidizing and aggressively building-out of the state’s hydrogen infrastructure in recent years.

According to S&P Global – by the end of 2022, there were about 62 hydrogen refueling stations across the state collectively capable of supporting a fleet of about 51,000 light-duty FCEVs. A 2018 executive order issued by former California Governor Jerry Brown set a target to expand the network to 200 stations by 2025.

Due to this investment, California’s average daily hydrogen dispensed per quarter has increased more than 7500% in the last few years (since 2016).

With California being the largest state per GDP ($3.5 trillion economy – which is even bigger than most developed countries), this is setting the trend for the rest of the U.S. in hydrogen.

The only issue right now crimping hydrogen growth from compounding even faster is that there’s still a limited amount of reliable hydrogen supply.

Last year, the California Fuel Cell Partnership stressed the need to shift the market’s focus from building refueling stations to ensuring stations are not frequently running out of supply.

This has become the biggest thorn in the side of the hydrogen market – there’s just not enough green hydrogen available.

This has spurred further development and investment into scaling-out green hydrogen.

But what’s most important here for green hydrogen is just how much cheaper it’s becoming over the next decade.

McKinsey reported that at a production cost of approximately $2 per kilogram, clean hydrogen will become very competitive in many sectors.

It will soon cost less to produce green hydrogen (leaving no greenhouse gas byproducts) than the current grey (dirty) hydrogen method.

Further government subsidies and support are critical to lowering these costs, which they’re fully committed to achieving.

Hydrogen Is Ready To “Combust”

With the macro agenda pushing more clean energy, hydrogen is set to play a crucial role in achieving these lofty net-zero targets.

Meanwhile, the micro picture has shown a significant reduction in costs for both fuel cells and green hydrogen production.

As economies of scale come into play, advancements in technology continue, and investments pour into research and infrastructure, the era of hydrogen-powered transportation, industry, and energy generation is right in front of us.

The inflection point of favorable factors – from greater environmental awareness to policy-driven incentives – has paved the way for hydrogen’s widespread adoption.

The transformative potential of hydrogen is clear: powering vehicles with water vapor emissions, stabilizing renewable energy grids, decarbonizing heavy industries, and revolutionizing our energy landscape.

This shift is no longer a distant possibility; it’s a tangible reality gaining momentum by the day.

In the late 18th century, hydrogen was first identified as a unique gas by the British scientist – Henry Cavendish.

He referred to it as “inflammable air” due to its highly explosive properties.

At the same time, the French chemist – Antoine Lavoisier – was also studying this unique element.

It was Lavoisier who is credited with naming “hydrogen” in 1783 – basing it from the Greek word’s “hydro” (meaning water) and “genes” (meaning forming) because hydrogen gas forms water when combined with oxygen.

These two men were essentially the pioneers of hydrogen. And set the foundation for future scientists to find creative ways to use it.

Later in 1839, the Welsh scientist – Sir William Grove – discovered the early principles of fuel cells and how hydrogen and oxygen would generate electricity and produce only water as a byproduct.

In fact, he developed the first working fuel cell nearly 200 years ago – known as Grove’s “Gas” Battery.

Grove even installed this early-fuel cell to power a small carriage, creating the first fuel-cell powered vehicle.

And even though this was a groundbreaking discovery, the boom in petroleum and gasoline took off during the second industrial revolution (1870 to 1970) on the back of the internal combustion engine for automobiles.

Petroleum-based fuels offered lower costs, established infrastructure (refiners, gas stations, etc), and economies of scale that hydrogen fuel cells couldn’t.

Thus the gas-powered automobile boom spread like wildfire, and hydrogen powered automobiles were left behind.

But they weren’t forgotten…

One Giant Leap For Mankind: NASA Rediscovers Hydrogen Power

After years of researching fuel cell technology, NASA began using it to power spacecrafts and space shuttles in the 1960s due to its high efficiency and the zero-emissions (which was essential in the closed environments of space missions).

The Apollo Space Missions saw fuel-cells played major parts in powering spacecrafts – including the historic Apollo 11 mission in July 1969 when Neil Armstrong landed on the moon.

Not long after witnessing fuel cells being used to power spacecrafts, the automobile industry began showing much more interest.

See, the 1970’s was a critical year for auto manufacturers in two big ways.

The oil-embargos – when Saudi Arabia and OPEC curbed oil exports to the U.S. – saw gasoline prices soar over 600% between 1973 and 1980.
And there were growing concerns about environmental damage and global warming caused by greenhouse gas emissions (GHG) from fossil fuels.

These two things sparked interest in alternative fuels – including hydrogen.

But of course, oil and fossil fuel companies – such as coal – didn’t like this.

And throughout the same period, these companies were pushing propaganda that climate change wasn’t happening.

For example, in 1991, Informed Citizens for the Environment, a front group of coal and utility companies announced that “Doomsday is cancelled” and asked, “Who told you the earth was warming … Chicken Little?”

Regardless, governments and automobile companies began aggressively researching and exploring fuel cells as solutions for reducing dependence on gasoline and curbing emissions.

Throughout the 1980s and 1990s, significant development efforts were made to improve fuel cells and hydrogen storage methods.

Automakers and governments began investing in hydrogen powered vehicle prototypes and projects.

In 1998, Iceland announced plans to create a hydrogen economy – converting all public transportation vehicles to fuel cells.
In 1999, Germany introduced the first commercial hydrogen refueling station.

Even President George W. Bush became so bullish on hydrogen cars that in 2003, he announced $1.2 billion for research and investment into hydrogen to help ‘lead the world in developing clean, hydrogen-powered automobiles.’

“With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom so that the first car driven by a child born today could be powered by hydrogen, and pollution-free,” President Bush said in his 2003 State of the Union address.

It looked like this was going to be the dawn of the era of hydrogen powered vehicles and infrastructure.

And while progress in hydrogen powered cars was ramping up on the back of these government incentives, it was cut short in 2009.

The Obama administration slashed the hydrogen research funding, claiming that the technology wouldn’t be practical for another 10 to 20 years. Instead, they focused on electric vehicles (EVs) and hybrids.

And this posed a problem…

Because while hydrogen vehicles were becoming more commercially efficient, there was still extremely limited infrastructure behind it.

For example, hardly any investment in fueling stations or hydrogen transportation had been made to power the small number of fuel cell vehicles on the road.

This prevented hydrogen and fuel cell vehicles (FCVs) from spreading as the combustion engine did 100 years prior.

But this all changed since 2020…

There’s no need to have a deep education in organic chemistry to understand the importance of hydrogen and the way it’s shaping the future of energy.

Here’s all that you need to know to get started.

What Is Hydrogen And Why Is It Revolutionizing Energy

Hydrogen is the lightest and most abundant atomic element in the universe.

The reason for this goes back to the Big Bang – the theory on how the universe was created.

The Big Bang quickly led to the formation of protons, neutrons, and electrons. And since hydrogen is the simplest element, it formed most quickly.

In fact, the sun and other stars are essentially giant balls of hydrogen and helium gases.

Hydrogen is colorless, odorless, non-toxic, and highly flammable.

Most importantly, the earth is riddled with hydrogen.

It can be found in a wide range of compounds – from oxygen in water (H2O) to hydrocarbons like petroleum and natural gas.

Best of all, hydrogen is considered an ‘energy carrier’ rather than an energy source itself because it needs to be produced from other substances.

But once it’s produced and used as a fuel, it does not produce harmful greenhouse gas emissions, such as carbon dioxide (CO2), or other harmful pollutants like methane or sulfur dioxide.

The only byproduct that enters the atmosphere during hydrogen combustion is water vapor, making it a clean alternative to fossil fuels.

Hydrogen also has a high energy content per unit of mass, which makes it an attractive option for energy storage and transportation.

It can store more energy in a smaller volume compared to conventional batteries, making it suitable for applications where space and weight are critical factors.

This is what makes Hydrogen ideal as a source of energy.

It can be used in various applications – such as powering fuel cell vehicles and combustion engines.

In fuel cells, hydrogen reacts with oxygen to produce electricity – making it a clean power source for transportation, industrial capacity, and providing electricity in homes.

So while hydrogen itself is a great source of energy, producing it comes with a catch…

Not All Hydrogen Is Created Equally: The “Good Kind” Vs. The “Bad Kind”

Even though hydrogen is a special and abundant element, it doesn’t exist by itself in nature.

As mentioned above, it has to be produced by separating it from other things it’s found in – like water, plants, and fossil fuels.

There are different ways to produce hydrogen, and some are cleaner than others.

“Green” hydrogen is the cleanest. It’s made by splitting water into hydrogen and oxygen using renewable energy like solar and wind. No harmful CO2 is released into the ai
“Blue” hydrogen is made from natural gas or fossil fuels, but the CO2 it produces is captured and stored, so it doesn’t harm the environment as much.
“Grey” hydrogen is the least clean. It’s made using natural gas or methane, and the CO2 is released into the atmosphere, which is not good for our planet.

Right now, most of the hydrogen we produce is “grey” (roughly 95%), and it creates a lot of harmful emissions that flow into the atmosphere and accelerating climate change.

That’s why “green” hydrogen production and infrastructure is ramping up as a zero-emissions alternative.

Put simply, green hydrogen is produced cleanly through a process known as electrolysis.

Here’s how it works:

During the electrolysis process, electricity from renewable sources – like solar or wind turbines – is used to split water (H2O) into its constituent elements, hydrogen (H2) and oxygen (O2). This happens when an electric current is passed through the water, causing the hydrogen atoms to separate from the oxygen atoms.
The separated hydrogen gas is collected and stored for later use.
The oxygen that is produced during electrolysis is also collected, but it can be released into the atmosphere without causing any environmental harm since it’s just pure oxygen.

Green Hydrogen: Energizing The Race Towards Net-Zero

Governments around the world have pushed for a ‘net-zero’ environment by 2050 – meaning the balance between the amount of greenhouse gas (GHG) that’s produced and the amount that’s removed from the atmosphere.

And because of this zero-emission and powerful renewable energy source that green hydrogen offers, governments and corporations around the world have realized they cannot hit their climate change goals without it. And these goals are ambitious.

According to the United Nations, more than 70 countries, including the biggest polluters – China, the U.S., and the EU – have set a net-zero target, covering about 76% of global emissions.
More than 3,000 businesses and financial institutions are working with the Science-Based Targets Initiative to reduce their emissions in line with climate science.
And more than 1000 cities, over 1000 educational institutions, and over 400 financial institutions have joined the “Race to Zero”, pledging to take rigorous actions to halve global emissions by 2030.

Because of this, governments have aggressively pushed incentives and subsidies to push green hydrogen infrastructure and production.

The Green Hydrogen Market Is Still In The Early Stage – But Growing Quickly

It’s clear that the current path is to move from grey hydrogen green hydrogen.

Major countries around the world have set up green hydrogen policies to make sure it grows fast enough to help achieve the net-zero goals.

For example, over the last couple of years we’ve seen the:

USA: Inflation Reduction Act
EU: Green Deal
UK Hydrogen Strategy
Canada’s National Hydrogen Strategy
Japan’s METI: Committed to H2 within transportation, industry, and power production.
India’s National Hydrogen Mission

And on the back of all these subsidies, the global green hydrogen market is poised to grow at a compounded annual growth rate of 54.98% between 2023 to 2032 – from $4.02 billion in 2022 to over $331.98 billion by 2032.

But all this growth requires much more green hydrogen infrastructure and investment.

Producing it is one thing, using it is another.

The entire hydrogen supply chain requires trillions in capital to scale it appropriately – from transportation and refueling stations to distribution and storage.

In fact, Goldman Sachs believes the world must invest over $5 trillion in green hydrogen supply-chains to reach net-zero targets to supply the huge demand for hydrogen (which is expected to rise 9x by 2050).

Goldman Sachs also noted that green hydrogen is the “next frontier of clean technology.”

This is an incredible amount of investment flowing into the rapidly growing sector.

And it’s only the beginning as macro-and-micro fundamentals switch gears towards hydrogen as a clean energy source.