Different types of hydrogen production

Hydrogen is a colourless gas that can be produced in different ways, with each method having a different impact on the climate:

• Green hydrogen is produced by electrolysis of water, using renewable energy such as wind or solar power. This process is completely climate-neutral, as no harmful emissions are produced.

• However, the majority of hydrogen currently produced is grey hydrogen, which is obtained from fossil fuels such as natural gas without capturing the resulting CO₂. This process is far from climate-neutral and significantly impacts the environment.

• Blue hydrogen is also produced from fossil fuels, but with the difference that the CO₂ produced is captured. This results in up to 98% less CO₂ being released, representing a significant improvement.

• Pink or violet hydrogen is produced using electricity from nuclear energy.

• There is also white hydrogen, which is found in natural deposits. Recently, large quantities of white hydrogen were discovered in France at a depth of 3,000 meters. This hydrogen only needs to be extracted but does not require energy-intensive production. Although it is currently hardly used, it could play an important role in the energy transition.

Future prospects for the production of hydrogen

By 2050, the installed capacity for hydrogen production from all sources could increase to between 3,000 and 5,000 gigawatts. Almost 80% of the energy for this is expected to come from solar energy. The renewable energy used for hydrogen production will therefore account for between 10% and 15% of global electricity generation.

Necessary infrastructure for hydrogen

Where could hydrogen replace fossil fuels?

1. In CO₂-intensive industries such as steel and cement production.

2. In heavy goods transport, by road, rail and sea.

3. In the long term, also in air traffic.

4. Hydrogen can act as a seasonal buffer when green wind and solar energy is available in excess.

Another advantage of hydrogen is that the existing natural gas infrastructure could continue to be used with a few adjustments. A European hydrogen network could consist of two thirds of the existing pipelines. Pipeline transport is cost-effective, while transport by ship is technically possible but generally much more expensive. Specifically, hydrogen could be mixed with natural gas, known as "blending". With minor adjustments, a proportion of up to 15% would be technically possible. The pipeline infrastructure would only need to be adapted slightly.

Regulatory framework conditions

Environmental compatibility is a key issue when it comes to the regulatory framework. The production of hydrogen is energy- and resource-intensive, and there are also some concerns about the safety of its use. In general, however, the technology is proven and safe.

The geopolitical significance must also be taken into account: Europe must be careful not to become dependent again. African countries, on the other hand, have plenty of solar energy, which in the best case offers an opportunity for local labour and economic development. Political stability and social security must therefore be taken into account in all decisions.

Conclusion: green hydrogen as an opportunity

Overall, we see the topic of "green hydrogen" as an opportunity. It contributes to the achievement of sustainable development goals, supports the energy transition, and reduces dependence on fossil fuels. This is why Raiffeisen Capital Management is following developments relating to hydrogen very closely.

The fund Raiffeisen-SmartEnergy-ESG-Aktien exhibits elevated volatility, meaning that unit prices can move significantly higher or lower in short periods of time, and it is not possible to rule out loss of capital.