Johnson Matthey PLC (LON:JMAT) has said it is well-positioned in the production of ‘blue hydrogen’ and ‘green hydrogen’, which it said could be a £1.5bn-per-year market by 2030, but is also contributing to the currently dominant form of 'grey hydrogen' which is made using fossil fuels.
The FTSE 100-listed company, which flagged all this helpful information in a statement ahead of an online seminar for investors and analysts on the lightest chemical element in the periodic table, said it currently has a 40% market share in grey hydrogen produced by catalytic converters.
Johnson Matthey chief executive Robert MacLeod noted that the company has been “a leader in hydrogen for many years”, with profitable sales of around £100mln annually across fuel cells and hydrogen production technologies.
“In fuel cells, we are very excited about the major growth opportunities where we can apply our catalyst and PGM [platinum group metals] expertise to decarbonise transportation.
"In hydrogen production, we are leveraging our capabilities in grey hydrogen and methanol process technology and are commercialising blue hydrogen through the HyNet and Acorn programmes. In green hydrogen production, we are in testing with leading electrolyser players where we can further utilise our proton exchange membrane technology,” he said in the statement.
Green hydrogen, which is produced from electrolysis of water using renewable energy, can be made using Johnson Matthey’s proton exchange membrane technology (PEM), tied to its expertise in fuel cells in PGM catalysis and closed-loop recycling.
The statement also contained lots of optimism about governments increasingly committing to aim at net zero carbon targets by 2050, “increasing momentum” in policy and from corporations, with Johnson Matthey “strongly positioned” to benefit.
But the company did not mention that grey hydrogen, which accounts for roughly 95% of the hydrogen produced in the world today, is produced using fossil fuels.
If current emission levels continue as they are by 2030 global warming is expected to have risen around 1.5° centigrade above pre-industrial levels, which is the threshold at which scientists have determined climate change effects will be catastrophic for life on Earth.
What's more UBS analysts agree there is potential worry on the horizon from Tesla's 'battery day' next week.
They noted that for Johnson Matthey the concept of a significant breakthrough in battery technology could “make it more difficult for JMAT to find a niche with its own 'eLNO' technology from 2023”.
What's more Tesla's developments could accelerate EV penetration, which could mean a more rapid displacement of Johnson Matthey's diesel and gasoline catalysts technology, which make up around 60% of group profit.
“Thus the hydrogen opportunity may be a strategic positive but might be sufficiently long-dated in autos to render it a debate more about terminal value than EPS growth to mid-decade.”