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HydrogenOne hopes to raise £250 million to invest in hydrogen energy projects
Thursday 08 Jul 2021 Author: Steven Frazer

A hydrogen-themed investment trust planning to launch on the UK stock market will hope it has a better debut than another hydrogen investment product which launched earlier this year.

Exchange-traded fund L&G Hydrogen Economy (HTWG) floated on the London market in February and has since fallen by nearly 20% in value. UK hydrogen-related stock ITM Power (ITM:AIM) is down nearly 30% over the same period, with some investors asking if there has been too much hype around the theme in the past few years.

For the UK to reach its target of zero carbon emissions by 2050, using hydrogen to generate electricity and as a replacement for other fossil fuels is the second-highest priority after electrification, according to the Government’s climate change committee.

HydrogenOne Capital Growth plans to list its shares on the London stock market in what would be the capital’s first listed investment fund dedicated to ‘clean hydrogen’.

Hydrogen has long-been touted as a potential mass clean fuel because the only by-product it emits is harmless water vapour.

However, most of the world’s hydrogen is currently extracted from natural gas in a process that produces vast amounts of carbon emissions. Clean hydrogen must be made via electrolysis or for the emissions from natural gas production to be captured and stored.

HydrogenOne hopes to raise at least £250 million to back a diversified portfolio of listed and private clean hydrogen projects and complementary hydrogen-focused assets to deliver capital growth with a strong environmental, social and governance focus, known for short as ESG. It has already identified 36 potential investments.

The company points to research showing governments have announced more than $70 billion in funding for hydrogen and believes clean hydrogen could hit sales of $2.5 trillion by 2050.

According to Bank of America and Goldman Sachs research last year, global governments are aiming to have nearly a quarter of the world’s energy come from clean hydrogen by 2050.

Over 200 hydrogen projects have now been announced worldwide, says HydrogenOne, with $300 billion capital expenditure potential. Approximately $80 billion of that amount is currently thought to be in production, construction or in the detailed design phase.

HydrogenOne was launched by former Royal Dutch Shell (RDSB) executive JJ Traynor and Richard Hulf, who worked at Exxon Mobil and has been an energy fund manager at Artemis. UK chemicals giant Ineos will be a cornerstone investor, buying £25 million worth of shares.

‘HydrogenOne is for energy investors who want to move beyond fossil fuels now, not later, and deploy substantial growth capital into the energy transition,’ says Traynor.

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