These Stocks Are Set To Benefit From The Rise Of “Green Hydrogen”
Many expect that hydrogen can and will be a carbon-free substitute for natural gas. My research shows that existing manufacturers and energy midstream companies could handle much of the transition.
These facts heighten the long-term investment potential of the companies that will produce and deliver hydrogen to utility companies.
Let’s talk about what “green hydrogen” is – and what the companies that could profit from its rise are…
Hydrogen, as a single molecule gas, burns without emitting any carbon. The current primary use of hydrogen is to produce ammonia, which is used as a fertilizer. Typical hydrogen production involves breaking down natural gas to capture the hydrogen. If the hydrogen producers capture the released carbon rather than allowing it to enter the atmosphere, the hydrogen is called blue hydrogen.
Green hydrogen, on the other hand, comes from the electrolysis of water. Burning blue or green hydrogen produces clean electric power.
The challenge with hydrogen is that it is tough to transport and store, which brings us back to ammonia. The chemical formula for ammonia is NH3—one molecule of nitrogen with three of hydrogen. An article on the ETF Trends website noted that it is less flammable than hydrogen and can be stored at higher temperatures. These features make ammonia potentially the optimal way to transport and store hydrogen that will be used to generate electrical power.
Ammonia is already widely used as a fertilizer. It is the best way to deliver nitrogen as a plant nutrient. As hydrogen grows in popularity as a power source, the demand for ammonia should grow tremendously. In the U.S., CF Industries (CF) is by far the largest producer of NH3.
The ETF Trends article highlights that energy midstream companies that process, transport, and store natural gas already own and operate the infrastructure to deliver ammonia or hydrogen to end-user utility companies.
The article mentioned Canadian pipeline company Enbridge (ENB), which will build a blue hydrogen ammonia production facility at its energy center in Texas. Also mentioned was the transportation network, EnLink Midstream (ENLC).
From my Dividend Hunter recommended portfolio, ONEOK, Inc. (OKE) operates one of the nation’s largest natural gas distribution networks.
The trend of using ammonia as a fuel source to generate electric power is just starting. It is one to watch.
This post originally appeared at Investors Alley.
Category: Lists of Dividend Stocks
