As governments bet that hydrogen is part of the solution to the problem of climate change, so it’s likely to become a far bigger part of the global energy mix.
Just 15 years from now, I expect that a colourless, odourless gas will quietly be part in our daily lives. That gas is hydrogen and it’s at the centre of plans from the EU and other governments for successfully stopping climate change, working alongside electrification to take the place of fossil fuels.
Think trains, trucks, buses, ships and aircraft, as well as district heating, power and essential industry such as steelworks. As governments move from pledging zero-carbon goals for their economies by 20501 to the problem of how to turn this into a reality, so they and private businesses are betting that hydrogen will be a major part of the solution.
That makes me and others think that the growing use of hydrogen is a future mega trend, with considerable long-term investment potential for the companies producing the gas, as well as those making the electrolysers and fuel cells that will be vital components of any future hydrogen economy. Nothing is certain, and there are plenty of risks: as hydrogen still is in full development many technical and infrastructural hurdles need to be overcome. Nevertheless, forecasts for growing hydrogen use give me confidence.
Climate change is rapidly emerging as the challenge of our time. To stop the global warming, governments are committing to making their economies carbon neutral by 2050, as they seek to fulfil the pledge signed at 2016’s Paris agreement to keep global warming well below 2 degrees Celsius.
Strong projected growth
The EU is the cheerleader for hydrogen, but others are also exploring putting hydrogen at the centre of their plans for a greener world. To give a sense of the likely growth in production, the Hydrogen Council projects that hydrogen will reach 13-24% of the global energy mix in 2050, up from just 2% in 2018, growing at an annualised compound rate of 8%.2
This forecast is for so-called ‘green’ hydrogen, produced using renewable electricity. Since it is emission-less, green is the optimal hydrogen production method. The chief other form of hydrogen is ‘grey’, which is generated using fossil fuels and will need to be phased out.
Green hydrogen looks set to play a part in the energy transition that electrification cannot. Its high energy density makes it more suitable than electricity for powering anything especially heavy, such as aircraft and ships.
In many cases, the technology is in place for hydrogen to be deployed, but in others it will take years. It’s already technically possible, for instance, to use blended hydrogen for heat and power in buildings, again according to the Hydrogen Council. Similarly, in transportation it can be used as fuel for buses, trains and passenger ships. But it’s unlikely to propel freight ships or aircraft until 2030 at least.
Figure 1 – Announced cumulative clean hydrogen capacity (Mt p.a.)

Source: Hydrogen Insights / McKinsey & Company: Hydrogen Insights A perspective on hydrogen investment, market development and cost competitiveness, February 2021.
Spreading your risk
At the same time as this technology is developed, so hydrogen production capacity will need to be built out. That should bring the cost down in a similar way to what’s already happened with wind and solar. The EU is certainly committed to this, with stated plans for at least six gigawatts (GW) of renewable hydrogen electrolysers by 2024 and at least 40 GW by 2030.3
The investment prospects of backing megatrends such as the emerging hydrogen economy can be significant. Yet there are risks, for instance from backing the wrong companies. That’s why we have launched our new VanEck Hydrogen Economy UCITS ETF, which is a low-cost way to spread your risk across the companies most likely to benefit.
Looking forward 15 years, I fully expect to be using hydrogen for travel, heat and other things besides. By then it seems fair to assume that some of the companies behind this megatrend may be household names, the equivalent of today’s energy giants.
There is no guarantee that forecasted growth will materialize.
1See e.g., https://ec.europa.eu/clima/policies/strategies/2050_en.
2Source: Hydrogen Council and Bloomberg New Energy Finance.
3Source: https://www.hydrogen4climateaction.eu/2x40gw-initiative.
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