Along with electric vehicles, hydrogen fuel is touted by many experts and manufacturers as the next big solution to help us move beyond environmentally destructive petrol.
But as an ASX shares investor, how do you identify which companies are involved in the hydrogen industry?
Fortunately, this week ETF Securities will provide an easy answer to that question.
The fund provider’s latest product, ETFS Hydrogen ETF (ASX: HGEN), will commence trading on the ASX on Thursday.
According to the company, the portfolio will comprise 30 stocks from the developed world with “a heavy exposure” to hydrogen.
ETF Securities has not revealed the specific stocks at the time of writing.
Is this like the internet in the 1990s?
ETF Securities head of distribution Kanish Chugh said that the “hydrogen economy” is still in an early stage.
“However, its potential applications are limitless – from making fertiliser to powering the world’s transport systems.”
He equated the current state of the hydrogen industry to the internet in the 1990s or semiconductors in the 1970s.
“In these instances, disruptive technologies reached tipping points and saw exponential uptake. Their uptake was driven by megatrends – which are one-off structural shifts in the economy and society.”
ETF Securities’ hydrogen ETF is understood to be the first exchange-traded fund on the ASX that solely focuses on hydrogen.
There are several of these funds already trading in overseas share markets.
Governments are subsidising hydrogen
To encourage cleaner fuels, governments around the globe are subsidising the development of hydrogen products, according to ETF Securities.
“Much of the current technology in the hydrogen industry is based around fossil fuel-based hydrogen,” the fund provider stated.
“However, new technology threatens to disrupt this old market, promising to bring the costs of green hydrogen down and production volumes up.”
While many mining companies are involved in extracting hydrogen, the new ETF reportedly will not invest in stocks that don’t meet ESG criteria.
“An ESG filter, using data from Minerva Analytics, [that] excludes companies involved in controversial weapons, small arms, gambling, tobacco and fossil fuels, or which are non-compliant with the United Nations Global Compact.”
“The fund also removes oil, gas and coal companies.”