Hydrogen-linked stocks have raced to their strongest levels in more than a decade, as investors bet that efforts to cut emissions will make hydrogen a viable alternative to fossil fuels in vehicles. For backers of this alternative fuel source, it has been a long wait for interest to rekindle since a brief flare-up more than 20 years ago. But for markets, the comparison also holds a cautionary lesson: how quickly excitement around a particular technology can dissipate.
The current wave of optimism has lifted the share price of London listed Ceres Power – a maker of fuel cells, which turn hydrogen and oxygen into electricity – by 57 per cent so far this year, notwithstanding the fact that the company has yet to turn a profit. Peers Ballard Power, based in Canada, and US-headquartered Plug Power are up 300 per cent since the beginning of last year, despite also being lossmaking.
The big rally in the sector is a realisation that a move away from fossil fuels “is not just about batteries, you need fuel cells as well”, said Phil Caldwell, chief executive at Ceres. For believers, the rising share prices reflect an expectation that hydrogen will benefit from a big push to decarbonise the global economy – and as an input in the making of steel and cement.
New shareholders can point to another category of investor: some of the largest industrial companies, including Bosch and Cummins, that have poured about $1bn into fuel cell companies over the past few years. China’s largest diesel engine maker Weichai Power owns a stake in Ceres and Ballard.