Is the report bad news for hydrogen?
The report concludes that there is a large low-carbon transition taking place in the markets, which raises prices and supply for raw materials in general.
The impact on hydrogen, however, would be “small”. The biggest impact is going to be in precious metals and important raw materials like zinc, copper and nickel. These are used to create the technologies for renewable energy sources the most.
The effectiveness of hydrogen in the future as a transitional material is less impacted. The forecast for hydrogen is still to overtake low-carbon demand around 2046.
How does supply and demand play into the low-carbon transition?
It is important to realize that supply and demand can counteract each other. While raw materials and investments can be done on the sole level of raw materials, it is important to know what they are used for.
If you invest into stocks on the material level, you are looking at the supply that comes from the ground or which ever method of creating it is used. There is a maximum capacity to create it.
Then there is the demand level, which comes into play on what the raw material is used for. In this case though, the raw materials are higher in-demand to be used for low-carbon solutions, so they are used for other sources than the raw material trading.
If, for example, gallium is created as a by-product, it is important to know that it still gets created, even if the focus shifts to using the hydroxide for other uses than the electrolysis. This kills the supply in the raw material, but does create more supply in other facets of the investment.
Can I safely keep investing in hydrogen?
As the report dictates, the future predictions of hydrogen as a zero-carbon fuel, is still very much alive. This means that the long-term strategy for hydrogen and the long-term investments, also still make a lot of sense.
But keep in mind that if the scope of low-carbon solutions grows, the actual use cases of hydrogen can slim. This can set a brake on the price of hydrogen.
Keep up-to-date on the news and make sure you keep track of your investments to make sure you are not falling into a downward spiraling investment.