Hydrogen fueling stations and hydrogen pipelines are a trillion dollar investment opportunity

(Note: To learn more about hydrogen fuel cell vehicles and their potential to solve the oil crisis, please read the series of articles titled “Twelve Hydrogen Facts” which is part of the Hydrogen Manhattan Project.)

I have recently been asked about what I feel are the best hydrogen investment opportunities.  Since I imagine a lot of people are wondering about this, I will cover this issue in today’s blog entry.

There are two points that I would like to make before I start:

1.  I am not going to recommend stocks.  But I will provide my opinion of the quality of the hydrogen technology that some companies have.  Companies with great hydrogen technologies can be overpriced, so I want to make it clear that saying good things about a company’s hydrogen technology does not mean that the stock should be bought.

2.  I am looking at this with a time frame of anywhere from 3-5 to 10-12 years.  The speed at which hydrogen cars come to market will depend on how quickly oil prices continue to rise.  If oil reaches $200 a barrel by the end of the year and stays above that level, hydrogen cars will come to market much sooner than people think.  But since nobody knows exactly how things will unfold with oil, it is nearly impossible to make accurate predictions about when hydrogen cars will come to market in large numbers.

The car companies will be covered first.  I could write a really long article on the quality of the hydrogen technologies of the car companies, especially Toyota, Honda, GM, and Hyundai.  But instead I will rank the car companies in terms of how good I think their hydrogen technologies are and then provide a few comments.

Based on what I know, here are the rankings:

1.  Toyota

2.  Honda

3.  Hyundai

4.  Daimler/Mercedes

5.  GM

Nissan, Ford, Chrysler, and Volkswagen are all involved with hydrogen, but none of them have the same sense of urgency with hydrogen as the first five companies.  Toyota’s hydrogen technology alone just might end all four of these companies.  People are going to gravitate towards the best when purchasing a new technology.

Furthermore, BMW has chosen to use hydrogen in internal combustion engines instead of fuel cells.  I think this is a huge mistake.  The much lower efficiency of internal combustion engines means that the fuel cost will be a lot higher and the driving range will be a lot less.  Unless I am missing something, BMW is in big trouble.

Although the car companies are a lot more fun to discuss, the biggest investment opportunity by far with hydrogen is the fueling infrastructure.  As the title of the blog entry states, this is a trillion dollar opportunity.

The world needs to build an entirely new fueling infrastructure for transportation vehicles.  It boggles the mind to even think about the enormity of this.  I personally cannot think of a greater challenge that mankind has ever faced, especially considering how quickly it will need to be done.  But we must do it.  The only other option is to have a far lower standard of living.

The need for hydrogen fueling stations is brought up all the time.  But the infrastructure will also include hydrogen pipelines.

Hydrogen could be produced on-site by reforming natural gas.  But there is a finite supply of natural gas just like oil and the price keeps going higher and higher.  And if any significant amount of cars were powered by hydrogen produced from natural gas, the price would skyrocket.

Furthermore, the few hydrogen fueling stations that make hydrogen on-site from solar power only produce a very small amount each day and it costs a lot more than large-scale production.

Hydrogen pipelines will distribute hydrogen produced from clean sources of energy (e.g. wind power in the Great Plains region or solar power in the Mojave Desert) to storage facilities close to where the fueling stations are.  Trucks would then deliver the hydrogen to each fueling station.

I have estimated that it would cost $405 billion to build all of the hydrogen fueling stations and hydrogen pipelines in the U.S. to completely replace gasoline.  Therefore, the cost to build the hydrogen fueling infrastructure for the whole world will likely be a few trillion dollars.

This is one of the greatest (if not the greatest) investment opportunities that the world has ever seen.

A few companies that build hydrogen fueling stations include Air Products, Linde, Air Liquide, and Praxair.  Again, I am not recommending that you buy their stocks.  And I believe each company is involved in many other areas besides hydrogen.

Hydrogen pipelines are covered in Hydrogen Fact #11.