Hydrogen is a bit of a complex topic. It’s not necessarily tough to understand, there’s just a lot of parts to it. In this post I’ll briefly take you through the history of prior hydrogen hype cycles and their similarities. It’s important to have this context so when we dive deeper you can draw parallels to prior eras and see where our mistakes may or may not be repeated.
In later posts we’ll dive deep into:
Problems with forecasting its adoption (why does no one know anything?)
My framework used to determine whether it’ll be different this time
What it means for Hydrogen to be an energy carrier vs. an energy source
The Laws of Physics that put a ceiling on Hydrogen efficiencies
Where Green Hydrogen CAN vs. WILL be used
Companies and countries subsidizing the Hydrogen Economy
The topic is such an enormous one despite how little the sector has infrastructurally progressed since the first hydrogen fuel cell was developed in in 1838, which combines hydrogen and oxygen gas to produce water and electricity. The element was first identified in 1766, and splitting water to produce hydrogen and oxygen gas was discovered in 1800 which we now know as ‘electrolysis.’
The Hydrogen Economy
The idea of a Hydrogen Economy is simple - power the world with hydrogen. The idea catches the world’s attention in waves. In history we see 3 distinct waves, the first starting in 1970s.
Google Ngram Viewer gives us a good idea of these waves overtime by counting the occurrences “Hydrogen Economy” appears in books. Unfortunately, the data ends in 2019. I’ve included my own estimate in an attempt to extrapolate the chart given the third wave that occurred in 2020, and where I see it going under various circumstances.
Wave 1: 1970s
The first mention of a Hydrogen Economy was made in 1972 by John Bockris. The idea was to create a global economy that relied primarily on hydrogen, produced from various energy sources, as the preferred carbon-free energy carrier (as opposed to electricity).
Bockris and other academics argued that hydrogen produced from coal or nuclear energy could be a new source of energy, mainly in the transportation sector. The idea gained traction as crude prices in the 1970s skyrocketed over 400% due to the Arab Oil Embargo. Given the world’s heavy oil reliance on just a few nations, it was becoming clear that we needed to diversify our energy sources.
Another big talking point during the 70s was using nuclear reactors to produce hydrogen, not only to diversify energy sources but to reduce emissions and air pollution as well. One Austrian physicist laid out a blueprint of his vision to have 10 islands of enormous nuclear reactors producing and distributing enough hydrogen to power the world.
The hype dissipated as oil and gas prices fell back to normal levels in the 1980s. All of a sudden, fossil fuels were in abundance again, and we didn’t need to invest ungodly sums of money into an unproved concept.
Interest in emissions and pollution reduction also waned - and just like that the need to find a cleaner, independent alternative energy source vanished.
Until…
Wave 2: 1990s-2000s
The second Hydrogen Hype came about in the 1990s. Similar to the first wave, this wave was characterized by a growing fear that global oil production would begin its descent at a time demand continued to rise. This concept was later dubbed “Peak Oil.” A greater concern for climate change simultaneously emerged.
In 1993 Japan launched the New Sunshine Project. One program within the project was the World Energy Network (WE-NET), the goal of which is to construct a worldwide energy network for the production and distribution of renewable energy using hydrogen.
In 2002 a popular book on the Hydrogen Economy authored by Jeremy Rifkin sent the hype cycle into 2nd gear. He argues that an economy run on hydrogen could make it the first truly democratic energy regime in history, citing centralized powers controlling the flow of energy today.
“While the fossil-fuel era is entering its sunset years, a new energy regime is being born that has the potential to remake civilization along radical new lines. Hydrogen is the most basic and ubiquitous element in the universe. It is the stuff of the stars and of our sun and, when properly harnessed, it is the ‘forever fuel.’ It never runs out and produces no harmful CO2 emissions.”
George W. Bush embraced the vision of a Hydrogen Economy due to the growing environmental movement. In 2003 the administration launched a $1.2 billion Hydrogen Fuel Initiative that envisions a future Hydrogen Economy for the U.S.
Note: Hydrogen was being praised as a clean-burning fuel, which would be a great replacement to the internal combustion engine. What few thought (or cared) about was the method being used to produce hydrogen. Today, nearly all hydrogen is produced from fossil fuels, a CO2-intensive process.
Concerns for peak oil began to decline just as shale tech began to show signs of promise, which ultimately led to the shale revolution. The global financial crisis led the concerns of the environment to dissipate, and just like that public interest in hydrogen faltered.
Until…
Wave 3: 2020s
The third Hydrogen Hype wave in 2021 came about due to the strong resurgence of climate change concerns, underpinned by Net Zero narratives. Check out our piece on “How narratives drive reality” to see the power that rhetoric has on investment, infrastructure development, and shifts in trends.
PLUG, BLDP, FCEL are some of the stocks that benefited from the hydrogen hype. Share prices soared due to investor interest, and some of the companies jumped on the opportunity to bolster their balance sheets and fund a multi-year expansion program by issuing enormous amounts of equity.
Could this Hydrogen Hype wave be different this time? Third time’s the charm?
It’s hard to imagine so. Especially after seeing the parallels this wave has with the prior two – fear of fossil fuel production declines, energy independence, and climate change concerns.
However, there are some pathways in which this ponzi could end up reaching escape velocity, meaning it becomes self-sufficient. But only under very specific conditions could this be a possibility.
I’ll go through these conditions in the next post, synthesizing my years of research in Hydrogen into a simplified flow chart to help you understand what could cause this hype cycle to be different this time.