The hydrogen market’s growing credibility
Plus, inside the sustainability schism and a look at pandemic-era philanthropy
When journalists write about other journalists, it often smacks of navel gazing — and is thus best avoided. However, this week I am breaking this rule since I have been struck by the intensifying debate inside the media about how to cover the climate crisis.
To cite one example: on Tuesday the World Editors Forum is holding its first virtual global climate conference to discuss “the gaps between what audiences need and want on climate change and what newsrooms are delivering right now.” This will discuss issues such as the role of storytelling and how to communicate technical data. Another debating point will be the decision by Canada’s Globe and Mail to release more than 180 files of its raw sources from an investigation into last summer’s extreme heat, reflecting a wider #ReadTheSources campaign from Unesco and the French group Outlet to make climate reporting more credible.
Can tactics such as these offset the crumbling levels of public trust in the media? What else can journalists (like us) do to communicate climate issues effectively? We would love to hear your views, given that Moral Money was established three years ago to illuminate green finance issues and ESG.
Meanwhile in today’s newsletter, we cover a striking data initiative in the fast-expanding world of hydrogen, a pandemic-era twist in philanthropy at Fidelity, new data about impact investing and alarming news about how rising sea levels threaten the US east coast. And if you want another sign of how sustainability issues are getting more media focus, check out the breaking story about how Carl Icahn, the corporate raider, has teamed up with animal welfare activists (which we will return to later this week.) Read on. Gillian Tett
Hydrogen is hot
The hydrogen market is red hot today, or so many opportunistic investors would say. However, like many nascent areas of finance, it has hitherto operated with considerable opacity. Last autumn, one of the first efforts to create more price transparency and consistency emerged: Deutsche Börse’s power and gas exchange EEX announced plans to launch a new price index in 2022.
Now another initiative is under way to help the market become more credible: S&P Global Platts, a provider for benchmark prices in the commodities and energy markets, is joining forces with other industry players to create a so-called Open Hydrogen Initiative (OHI) — a platform to let investors and companies track carbon emissions from hydrogen.
It is easy to see why this is needed. Hydrogen has recently sparked great excitement in the renewable energy world since the fuel is light, storable, energy-dense, and appears to produce no direct emissions of pollutants or greenhouse gases, a key attracter for green investors, as a recent report from the International Energy Agency explains.
As a result, the sector is growing fast: in 2020, the space was estimated to be worth more than $187bn, but it is projected to reach $286bn by 2027, according to MarketWatch. Meanwhile, annual government funding for hydrogen has reached $16bn a year globally, up 40 per cent from July 2021, according to research group Bloomberg NEF.
However, thus far there have been relatively few ways for investors, companies or governments to track indirect emissions from the fuel in a consistent way. This matters given the pressure on companies (and asset managers) to measure all aspects of emissions emanating from corporate supply chains, under scope one, two and three reporting systems.
To tackle this, S&P Platts is working with GTI (the research education group) and the National Energy Technology Laboratory to build tools to track hydrogen greenhouse gas emissions at the production facility level. These will be free for investors and companies to use, and aim to establish benchmarks for the market. “What we know is that we need hydrogen. It is very versatile. But what we have not yet had is precise and consistent technical tools for measuring hydrogen’s carbon intensity,” said Paula Gant, senior vice-president of strategy and innovation at GTI. “And, we’re at a place where the market needs that to enable hydrogen’s rollout.”
The group hopes this will promote wider adoption of hydrogen. “We see hydrogen being a key part of the future of the energy market in the decades to come” Jonty Rushforth, S&P Global Platts senior director, told Moral Money.
However, technical challenges remain. Previous research from S&P Global Platts suggests the cost of producing hydrogen from renewables will need to fall by more than 50 per cent to be a viable alternative to traditional energy. Hydrogen faces big production challenges and is difficult to store and transport. (The Saudis, however, seem to have set their bet on the growing market.)
Establishing price and emissions indices could spark more research and development to tackle these issues; or so the group hopes. And the initiative incorporates another interesting twist that investors should watch: the group intends to include metrics that indicate how much confidence investors should have in the emissions data.
This reflects a growing recognition that “green” measurements can sometimes be more art than science. This should not stop investors or companies from trying to measure emissions; but a more realistic debate is needed about the limits of current tools. Call this, if you like, another sign that the green market is growing up.