Why is the ETFS Hydrogen ETF (ASX:HGEN) share price climbing today?

More energy companies are exploring the potential of hydrogen energy…

| More on:
high, climbing, record high

Image Source: Getty Images

It has been a disappointing past month for the ETFS Hydrogen ETF (ASX: HGEN) share price. However, today has bucked the trend as the hydrogen-focused exchange-traded fund swings to the upside.

In afternoon trade, the clean energy ETF is fetching a price of $11.85, representing an increase of 3.04% from its previous close. Despite the gain, the fund remains 15% below its 52-week high, which was set on 15 November 2021.

Shares in the ASX-listed Hydrogen ETF are rising in value today as a string of notable companies announce further hydrogen ambitions.

Industry titans dipping their toes in hydrogen

The green revolution has been relentless in attempting to upend traditional energy companies. As onlookers become more anxious about the world’s overreliance on fossil fuels, a swathe of more renewable and/or emission-free alternatives have gained traction.

More recently, hydrogen has been held to a high standard as an emission-free replacement to carbon-producing energy sources. For instance, Fortescue Metals Group Limited (ASX: FMG) founder Andrew ‘Twiggy’ Forrest has been advocating for hydrogen.

The company’s subsidiary, Fortescue Industries aims to produce 15 million tonnes of water-derived fuel by 2030. Though, investors of the Hydrogen ETF are likely looking at the latest accomplices to join the fray with eager eyes.

Today, the hydrogen industry gained two major energy companies as participants in the hydrogen industry. While the companies haven’t announced a complete upheaval of their fossil fuel foundations, they have indicated — at a minimum — interest in hydrogen energy.

The companies in question are AGL Energy Limited (ASX: AGL) and Royal Dutch Shell (LSE: RDSA). Firstly, Shell has entered into a joint venture with BlueScope Steel Limited (ASX: BSL) to develop hydrogen projects at the Port Kembla Steelworks. Similarly, AGL has partnered with Fortescue Future Industries to explore the development of a hydrogen hub in the Hunter Valley.

Certainly, these announcements show a genuine interest from energy giants in testing the hydrogen waters. As such, investors of the Hydrogen ETF have likely gained a heightened conviction for hydrogen’s involvement in the future of energy.

How has the Hydrogen ETF performed?

Since listing on 7 October 2021, the ETFS Hydrogen ETF share price has rallied 17.2%. Interestingly, while the ETF is listed on the ASX, it does not contain any Australian companies. Instead, its constituents are predominantly based in the United States. However, the fund’s lack of Aussie companies has not held it back from outperforming the ASX.

Should you invest $1,000 in ETFS Hydrogen ETF right now?

Before you consider ETFS Hydrogen ETF, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and ETFS Hydrogen ETF wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ETFs