Starting a new industry from scratch is not easy, but several ASX companies are moving into the space. They include Fortescue Metals Group Ltd (ASX: FMG), Pure Hydrogen Corporation Ltd (ASX: PH2) and Hazer Group Ltd (ASX: HZR).

Different businesses have different plans for their hydrogen production.

Hazer wants to use a "low-emission hydrogen and graphitic carbon production process". This involves converting natural gas (predominately methane) and similar feedstocks into hydrogen and "high-quality advanced carbon materials". The process would use iron ore as a catalyst.

Meanwhile, Fortescue Future Industries (FFI) wants to make 'green hydrogen' through electrolysis using water and renewable energy.

What's holding back hydrogen?

While many companies in Australia and worldwide want to be involved in the hydrogen sector, some experts have pointed to hurdles that need to be overcome. These were outlined recently at the Australian Petroleum Production and Exploration Association annual conference, according to reporting by The Australian.

The conference heard that the sectors faced challenges such as customer demand for the many proposed hydrogen projects around the world and how to safely and cost-efficiently transport the gas once produced.

The BloombergNEF senior associate of hydrogen, Kathy Xitong Gao, said:

This is the real struggle for hydrogen right now, the slow pick-up from the demand side. The transportation of hydrogen is a big issue, and to liquefy hydrogen is still very, very expensive. It's around $US5 to $US7 per kilogram, so it's very expensive.

Deloitte partner Matthew Walden said that low-emission hydrogen was "emerging as a key element in the pathway to net zero", but costs and regulatory issues remained. Walden said:

Important mechanisms to achieve this include the implementation of targets and mandates for low-emission hydrogen production and uptake.

What progress has been made?

Earlier in May, the Australian Government announced a $2 billion 'hydrogen headstart' initiative to help the "biggest green hydrogen projects to be built in Australia". This funding will:

… provide revenue support for investment in renewable hydrogen production through competitive production contracts. Funding will cover the commercial gap between the cost of hydrogen production from renewables and its current market price.

It will support two to three flagship projects, though there hasn't been any confirmation of which projects will be helped yet.

One ASX hydrogen share that's making progress is Fortescue. Its FFI business was pleased to announce last year it had signed an agreement with E.ON to deliver up to 5 million tonnes of green hydrogen to Europe by 2030. However, not all of this green hydrogen may necessarily come from Australia.

FFI has also signed an agreement with JCB and Ryze Hydrogen to supply those two UK businesses with 10% of FFI's global green hydrogen production. This was heralded as a "multi-billion pound deal".

While FFI is working on a global portfolio of green hydrogen production projects, it has also revealed it's working with energy infrastructure developer Tree Energy Solutions (TES) to develop the TES green energy hub in Wilhelmshaven, Germany. It aims to start receiving green hydrogen deliveries in 2026.

Time will tell how successful Australia, FFI and other ASX hydrogen shares are at producing low-emission hydrogen and transporting that to the world.

The post 'The real struggle': Can an ASX investment in hydrogen really pay off? appeared first on The Motley Fool Australia.

The budget saw $2 billion set aside to accelerate Australia's renewable hydrogen industry.

That's good news for Fortescue Metals Group Limited (ASX: FMG). The company's hydrogen venture Fortescue Future Industries is aiming to be a leader in the space.

The Fortescue share price is up 0.5% right now, trading at $20.68.

Meanwhile, shares in fellow hydrogen-focused stocks Pure Hydrogen Corporation Ltd (ASX: PH2) and Hazer Group Ltd (ASX: HZR) are putting the iron ore giant's gains to shame.

Stock in Pure Hydrogen is surging 11.4% to trade at 19.5 cents at the time of writing while those in Hazer are leaping 6.9% to reach 69.5 cents.

For comparison, the benchmark All Ordinaries Index (ASX: XAO) is slipping 0.1%.

Let's take a closer look at the government spending that's seemingly putting wind under the renewable energy-focused ASX shares on Wednesday.

Labor reveals $2b Hydrogen Headstart program

It's an exciting day for those invested in ASX hydrogen shares. The federal government revealed its $2 billion Hydrogen Headstart program alongside its 2023 budget last night.

In last night's speech to parliament, treasurer Jim Chalmers said:

Hydrogen power means Wollongong, Gladstone and Whyalla, can make and export everything from renewable energy to green steel. Seizing these kinds of industrial and economic opportunities will be the biggest driver and determinant of our future prosperity.

The Hydrogen Headstart program makes up half of the $4 billion new renewable energy spend announced as part of this year's budget.

It aims to scale up the development of Australia's hydrogen industry by providing revenue support for large-scale renewable hydrogen projects through competitive production contracts.

A joint release from Chalmers, minister for climate change and energy Chris Bowen, and assistant minister for climate change and energy Jenny McAllister reads:

These [contracts] will help bridge the commercial gap for early projects and put Australia on course for up to a gigawatt of electrolyser capacity by 2030 through two to three flagship projects.

They said Australia's path to net zero is dependent on the renewable energy source, which can be combusted for industrial heat, used as a chemical input for green manufacturing and as a fuel for heavy transport, or exported.

Fortescue has welcomed the move, saying it "demonstrates how seriously the government is taking the green hydrogen industry and its critical role in Australia's future".

How have ASX hydrogen shares been performing in 2023

Apparent budget-related gains aside, ASX hydrogen shares have been putting out a mixed performance so far this year.

Leading the pack is the Hazer share price, which has gained 25% since the start of 2023.

Meanwhile, that of Pure Hydrogen has lifted 3% and Fortescue stock is up 1% year to date.

Comparatively, the All Ordinaries Index has increased 4% since the new year began.

The post ASX hydrogen shares surge on 2023 federal budget $2b cash splash appeared first on The Motley Fool Australia.

As some jumped close to 70%, others dumped a quarter of their value.

And while all that was happening, the broader market stayed relatively flat. The benchmark All Ordinaries Index (ASX: XAO) fell just 1% over the three months ended 30 September.

So, what went on with some of the market's most notable ASX hydrogen shares in the September quarter? Let's take a look.

Peaks and troughs for ASX hydrogen shares in Q1

ASX hydrogen shares put on a mixed performance over the first quarter, with some, like Frontier Energy Ltd (ASX: FHE), posting major gains.

The Frontier Energy share price lifted 68% over the period, closing September at 37 cents.

The company worked to secure a water supply needed to produce green hydrogen using energy from its Western Australia-based Bristol Springs Solar Project.

Its agreement with Water Corporation – announced on Thursday – will save the company from kicking off its back-up plan – building a desalination facility.

The Province Resources Ltd (ASX: PRL) share price also had a great quarter, gaining 54% to trade at 8 cents.

The big news from the company behind the HyEnergy Project last quarter came in August when it announced it had secured an additional 2,217 square kilometres of land for the project.

The Pure Hydrogen Corporation Ltd (ASX: PH2) share price also had a good run in the September quarter, gaining 23% to close the period at 27 cents.

However, the quarter wasn't a good one for every major ASX hydrogen share.

The Hazer Group Ltd (ASX: HZR) share price dumped 25% over the period, slumping to trade at 57 cents.

The major drag on the stock was news a critical part of its demonstration plant had failed, delaying the company's planned hydrogen production until 2023. The stock fell 17% on the back of the news.

And while most of its income comes from non-hydrogen sources, the S&P/ASX 200 Index (ASX: XJO) iron ore giant behind hydrogen-focused Fortescue Future Industries, Fortescue Metals Group Limited (ASX: FMG), saw its share price fall 4% last quarter.

The post There were big winners and losers among ASX hydrogen shares in Q1. Here's the lowdown appeared first on The Motley Fool Australia.

We've all heard about lithium-ion (li-io) batteries – it's been hard not to – and the (emission-free) glamour that surrounds the electric vehicle space.

It's no coincidence some of the best-performing ASX shares in 2022 are tied to lithium.

Then there are the other 'traditional' sources of renewable energy: solar, wind, geothermal, nuclear, etc.

It really is a new marketplace. Yet, the geopolitical fallback still involves hydrocarbons: oil and gas.

However, one form of clean energy you mightn't be so familiar with is hydrogen.

Hydrogen is also doing the rounds and making a name for itself as a hot (or cold?) contender for top spot in the green energy stakes.

Let's take a deep dive into the sector to strip out the fluff and put some flesh on the skeleton of the ASX hydrogen space. Read on.

Hydrogen for fuel?

Hydrogen is a chemical element with the easy-to-remember symbol 'H'. It is, in fact, the lightest element on the periodic table.

In practical terms, it is a highly combustible and flammable gas that – like natural gas – can also be condensed into a liquid, albeit at roughly minus 253 degrees Celsius.

Hydrogen is found just about everywhere in nature. In particular, water (the classic H2O) and hydrocarbons, like methane, are very common sources.

The gas can also be produced from a variety of sources, such as natural gas, nuclear power, and even renewable energy like solar.

This gives rise to hydrogen's 'green' credentials as hydrogen produced by electrolysis is a more energy-intensive process.

According to the United States Energy Department (USED), "Hydrogen is an energy carrier that can be used to store, move, and deliver energy produced from other sources".

Hydrogen is also faring as a contender to power fuel cells of non-combustion engines. It can, as USED says, "power fuel cells in zero-emission vehicles".

But just how efficient and effective is hydrogen at powering vehicles? And how does it stack up compared to 'traditional' fuel sources like oil?

Actually, quite well. According to USED:

A fuel cell coupled with an electric motor is 2–3 times more efficient than an internal combustion engine running on gasoline.

The energy in 2.2 pounds (1 kilogram) of hydrogen gas is about the same as the energy in 1 gallon (2.8 kilograms) of gasoline.

So then, does it have any advantage over lithium-ion electric vehicle batteries?

It seems to boil down to two factors: distance and refuelling time.

According to sustainability publisher youmatter: "While most fully electric vehicles can travel between [160–320 kilometres] on a single charge, hydrogen ones can get to [482 kilometres]."

However, there is far less of a gap when comparing premium lithium-ion EV batteries to the best hydrogen fuel cells. Indeed, most prominent EV manufacturers have opted to proceed down the battery-powered technology path.

Interesting debate

The push to discover and develop new forms of fuel for transport has sparked an interesting debate. While hydrogen is abundant on earth, it must undergo a process to separate it into its pure form, and then compress it into fuel cells.

Meanwhile, developing lithium-ion battery technology has led to a wave of new mining ventures on a global scale. Indeed, the International Energy Agency (IEA) says the auto industry will require 30 times the current amount of minerals to meet demand.

We are already seeing the effect this imbalance in supply and demand is causing. The price of lithium hit all-time highs again this week. There are also questions on the ongoing availability of these critical minerals.

And so the debate turns to what's going to be the best at powering vehicles looking ahead, from a cost and feasibility perspective.

Australian mining figure Andrew Forrest, founder of Fortescue Metals Group Ltd (ASX: FMG), has been leading the hydrogen charge both on our shores and abroad via his investment vehicle Fortescue Future Industries (FFI).

Forrest is aiming to produce 15 million tonnes of green hydrogen by the year 2030, in line with targets set by the European Commission.

When quizzed on how he intends to finance the ambitious goal, he told The Financial Times Hydrogen Summit: "Look, I built $50 billion worth of iron ore infrastructure in the Pilbara…I am very used to executing large capital projects at a cost that is a fraction of what our competitors do," The Financial Times reported.

He also took a shot at prominent lithium-ion battery proponents, adding: "[Tesla CEO] Elon Musk knows that almost every time a Tesla is plugged into almost every grid in the world, it is just burning coal and oil and gas…[and] it is doing nothing for the environment."

What's all this mean for ASX hydrogen shares?

Whilst there's plenty to like about the future of hydrogen, it hasn't yet made its mark on the ASX. In fact, the sub-sector continues to face heavy selling pressure.

Shares of Hazer Group Ltd (ASX: HZR), a company that conducts research and development into hydrogen-producing technology, are down 45% this year to date.

In July, the Hazer share price was crushed when the company reported a part for its commercial demonstration project had failed during fabrication.

Meanwhile, shares of Pure Hydrogen Corporation (ASX: PH2) have also headed south and are down 52% since January.

In contrast to the speculative mania setting the lithium/electric vehicle space alight over the past two years, the hydrogen fuel camp hasn't secured anywhere near the hype.

The returns for both of these ASX hydrogen shares are plotted on the chart below against the S&P/ASX 200 Energy Index (ASX: XEJ), in red, over the past 12 months.

The diversion in performance is abundantly clear, perhaps as abundant as hydrogen is in the environment.

The post Are ASX hydrogen shares worth buying right now? appeared first on The Motley Fool Australia.