News & media Hydrogen’s Industrial Reality vs. the Hype Cycle and the Road to Real Value
In the grand narrative of technological advancement, history often rhymes with striking precision. Today, we find ourselves at a pivotal juncture in the story of hydrogen, reminiscent of the early days of the internet.
In a 1996 Newsweek article, scientist and author Clifford Stoll dismissed the internet as a passing fad, arguing it had no real potential to replace traditional systems such as education, commerce, or communication. Famously, he wrote ‘no online database will replace your daily newspaper […] and no computer network will change the way government works’.[1] Again in 2000, an article titled ‘Internet may be just a passing fad as millions give up on it’ was published, reflecting another wave of scepticism that emerged during the dot-com bubble’s burst.[2] The same sentiments of disillusionment argued the internet’s early adoption was more of a novelty than a transformative tool, with some predicting it would fade as a cultural and economic force. Today, such scepticism seems remarkably short-sighted.
In hindsight, the challenges of the early 2000s were not the internet’s demise, and instead part of its evolution in becoming the transformative technology of the modern age. Hydrogen finds itself in a remarkably similar position as the internet did in 1996 – weathering a storm of scepticism that may well herald its impending breakthrough.
While the internet analogy provides a compelling framework, it’s not the only historical parallel worth considering. The early days of the oil industry were marked by significant technical challenges and widespread doubt. Yet, those visionary investors who recognised its potential reaped unprecedented rewards as oil became the lifeblood of the 20th-century economy. More recently, we’ve witnessed similar trajectories in renewable energy technologies. Solar and wind, once derided as costly and unreliable, now often undercut fossil fuels in price while reshaping our energy mix. Even electric vehicles, discussed a mere decade ago as impractical and exorbitant, are now driving a revolution in the automotive industry.
These examples underscore a crucial point: transformative technologies often face their harshest criticism on the cusp of widespread adoption. It’s at this critical juncture that we find hydrogen today.
Recent headlines paint a challenging picture for hydrogen, questioning its production costs, storage inefficiencies, and the daunting infrastructure hurdles that lie ahead. Some have gone so far as to question hydrogen’s viability in a future dominated by solar, wind, and battery technologies. This wave of scepticism, though, should not be interpreted as hydrogen’s death knell. Rather, it signals the end of the initial ‘hype cycle’ and the dawn of meaningful progress.
In the world of innovation, technologies often traverse a predicable path known as the ‘hype cycle’. This hype cycle begins with a spark of innovation that captures interest and optimism. It quickly rises to inflated expectations, where excitement often outpaces realistic understanding. Naturally, as with all new technologies certain challenges arise, and the previous overexcitement gives way for critics and sceptics, leading to a trough of disillusionment. Over time, through refinement and practical applications, the technology ascends a slope of enlightenment, gaining traction and credibility. Finally, it reaches a plateau of productivity, becoming a mature, valuable tool integrated into everyday use.[3]
Hydrogen has now entered this trough of disillusionment, and it’s precisely in this valley that the most lucrative opportunities often emerge.
The case for hydrogen extends far beyond mere supplementation of renewable energy sources. It represents a critical solution to some of our most intractable decarbonisation challenges. While solar and wind excel in electricity generation, hydrogen shines in sectors where electrification proves impractical. These hard-to-abate sectors – heavy industry, aviation, maritime transport, and long-haul freight – all face significant barriers to adopting traditional renewables. Hydrogen, with its energy density and potential for carbon-neutral production, offers a unique solution to these challenges.
Consider the steel industry, which is responsible for ca. 7% of global CO2 emissions.[4] Hydrogen can be used to replace coking coal in steel production, a transformation that’s already underway with companies like SSAB in Sweden producing fossil-free steel. In agriculture, hydrogen is crucial for producing green ammonia, a key component in fertilisers. Even the notoriously difficult-to-decarbonise cement industry could benefit from hydrogen’s ability to provide the high-temperature heat necessary for production.
Beyond industrial applications, hydrogen’s potential as a long-duration energy storage solution is gaining recognition. Unlike batteries, hydrogen can store energy for months, addressing seasonal variations in renewable energy production. This capability, coupled with hydrogen electrolysers’ ability to provide grid balancing services, could prove instrumental in integrating higher percentages of variable renewable energy into our power systems.
The value chain surrounding hydrogen is vast, offering numerous investment touchpoints from production and storage to distribution and end-use applications. As countries worldwide commit to stringent emissions reductions and energy security, the infrastructure supporting hydrogen will become indispensable.
In the private sector, the momentum is tangible. According to the IEA Global Hydrogen Review, in 2023, companies signed offtake agreements for more than 2 million tonnes of low-emissions hydrogen-equivalent per year, with nearly 40% covered by firm agreements.[5] These agreements are crucial for helping to derisk investment in hydrogen projects, providing the financial certainty needed to drive industrial transformation.
Recent headlines may warn of setbacks or inefficiencies, but these growing pains should be viewed as part of the natural evolution of a disruptive technology. The notion that hydrogen is simply a ‘hype-fuelled bubble’ ignores the real strides being made in research, development, and commercialisation. These challenges – be they related to cost, infrastructure, or efficiency – don’t have to be viewed as insurmountable barriers, but as lucrative opportunities for innovation and investment. Each problem solved represents a potential market leader in the making.
Bloomberg New Energy Finance projects that green hydrogen costs could plummet by up to 85% by 2050. The cost of electrolysers, vital for green hydrogen production, has already fallen by 60% since 2010, with further reductions expected as production scales up and new technologies emerge.[6]
Governments and corporations are already starting to place their bets on hydrogen’s future. In the UK, the new labour government has committed to fund hydrogen and related projects in the recent Budget. In Germany, the Federal Network Agency recently announced the approval of a 9,040-kilometer core hydrogen network, which is set to become Europe’s largest hydrogen pipeline system, targeting completion by 2032. This hydrogen network is part of the European Hydrogen Backbone initiative and consists of a group of over 30 energy infrastructure operators, working together on developing the hydrogen infrastructure – based on existing new pipelines – to enable the development of a competitive, liquid, pan-European renewable and low-carbon hydrogen market. Similar trends can be seen in China, Japan, and, increasingly, the United States.
Energy majors like BP, Shell, and Total are also looking to hydrogen, leveraging their existing infrastructure and expertise. Integrated hydrogen ecosystems, such as those being developed in the Port of Rotterdam, are creating end-to-end hydrogen value chains that will serve as models for future development.
The investment landscape further substantiates this optimism. While headlines have focused on several recently stalled hydrogen projects, the number of projects reaching Final Investment Decision (FID) has doubled compared to the previous year, reaching 3.4 million tonnes per annum. This represents a potential fivefold increase in production by 2030. Moreover, governments have announced approximately USD 100 billion in policy support for low-emissions hydrogen adoption, signalling a robust institutional commitment.[7]
The potential market for hydrogen is staggering. The Hydrogen Council estimates that hydrogen could meet 18% of global energy demand by 2050, creating a market worth $2.5 trillion per annum.[8] McKinsey’s projections are equally optimistic, suggesting that by 2050, hydrogen could meet 19% of global energy demand, 30% of transportation fuel demand, and 15% of industrial energy demand.[9]
The hydrogen revolution is not a distant future—it’s unfolding now. While challenges remain, the convergence of technological advancements, policy support, and urgent climate imperatives is creating a perfect storm for hydrogen’s ascendance.
For investors, there is a clear opportunity to position yourself at the forefront of a technology that promises to reshape our energy landscape. Those who can see beyond the current challenges, understand the long-term potential and inevitability of hydrogen in a decarbonised world are poised to reap significant rewards from hydrogen’s inevitable breakthrough. The scepticism surrounding hydrogen today may well be the surest sign of its imminent breakthrough.
As we stand on this cusp, the question for forward-thinking investors should not be if, but how, to participate in this unfolding revolution.
Cordiant has joined the field of hydrogen through the acquisition of HydrogenOne Capital LLP – now Cordiant HydrogenOne – a clean hydrogen infrastructure specialist and the investment manager for HydrogenOne Capital Growth plc (LSE:HGEN), the only London-listed clean hydrogen fund in the market. Cordiant sees this transaction as a decisive move to bring investors (both public and private) opportunities in the clean hydrogen sector, which it believes is poised to become the dominant part of the world’s ca. $200 billion p.a. hydrogen market.[10]
Bibliography
Stoll, C. (1996). “The Internet? Bah!” Newsweek.
“Internet may be just a passing fad as millions give up on it” (2000).
International Energy Agency (IEA). (2023). Global Hydrogen Review.
Bloomberg New Energy Finance. Hydrogen Cost Projections to 2050.
Hydrogen Council. (n.d.). Hydrogen Market Estimates.
McKinsey & Company. Global Energy Perspective: Hydrogen Demand Projections.
European Union Hydrogen Strategy Documentation.
Iron and Steel Technology Roadmap, International Energy Agency. (2020)
‘Hydrogen Market Size – By Type, By Application, Forecast, 2025-2034’, Global Markets Insights. (2024).
[1] Stoll, C. (1996). “The Internet? Bah!” Newsweek.
[2] ‘Internet may be just a passing fad as millions give up on it’ (2000).
[3] Gartner Hype Cycle
[4] Iron and Steel Technology Roadmap, International Energy Agency. (2020).
[5] International Energy Agency (IEA). (2023). Global Hydrogen Review.
[6] Bloomberg New Energy Finance. Hydrogen Cost Projections to 2050.
[7] International Energy Agency (IEA). (2023). Global Hydrogen Review.
[8] Hydrogen Council. (n.d.). Hydrogen Market Estimates.
[9] McKinsey & Company. Global Energy Perspective: Hydrogen Demand Projections.
[10] ‘Hydrogen Market Size – By Type, By Application, Forecast, 2025-2034’, Global Markets Insights. (2024).
