ETF Securities opens access to the hydrogen economy, launches ETF  ‘HGEN’


Kanish Chugh

As business and scientific enthusiasm for hydrogen as a clean energy source grows, ETF Securities has moved to give investors access to opportunities in the emerging hydrogen economy.

Launched yesterday, and available on the ASX, ETFS Hydrogen ETF (ASX Code: HGEN) invests in a concentrated portfolio of 30 stocks from developed markets, Korea and Taiwan, with a heavy exposure to hydrogen.

It targets pure play companies that produce hydrogen fuel cells and their components, make hydrogen refuelling stations and other infrastructure like storage, and companies that generate hydrogen or build electrolysers.

ETF Securities Head of Distribution Kanish Chugh says the new ETF aligns with the company’s focus on providing investment opportunities that tap into social and economic megatrends.

In August, ETF Securities launched ETFS Semiconductor ETF (ASX Code: SEMI), giving investors access to the world’s booming semiconductor industry.

“The hydrogen economy is a greenfield investment opportunity, still in its early development stage. However, its potential applications are limitless – from making fertiliser to powering the world’s transport systems,” Chugh says.

“Hydrogen may be like the internet in the 1990s, or semiconductors in the 1970s. In these instances, disruptive technologies reached tipping points and saw exponential uptake. Their uptake was driven by megatrends – which are one-off structural shifts in the economy and society.”

Governments around the world are providing subsidies to support the development of clean energy technologies, including hydrogen. There is already a significant pipeline of hydrogen power projects in a number of countries.

Much of the current technology in the hydrogen industry is based around fossil fuel-based hydrogen. However, new technology threatens to disrupt this old market, promising to bring the costs of green hydrogen down and production volumes up.

Some examples include solid oxide electrolysers (SOEs), produced by Bloom Energy in the US and Ceres Power in the UK. Electrolysers are a piece of technology that can split water into two parts: hydrogen and oxygen. SOEs try and split steam rather than water into hydrogen and oxygen, and by doing so make green hydrogen very quickly. They are also potentially more energy efficient as they can use “waste heat” – such as that produced at nuclear power plants – to boil the water.

Another example is advanced coal seam gas technology which can extract hydrogen from abandoned oil fields while leaving the carbon underground. Canadian firm Proton Technologies is exploring this. This technology works quite like steam reforming – the traditional way of creating hydrogen, by reacting methane with steam – but done underground and with a special palladium filter that only collects hydrogen.

Another example is biogas processing, which turns waste – such as sewage, landfill or farm waste – into renewable gasses, including hydrogen. It is especially environmentally positive because it not only provides a source of clean hydrogen, but it also removes waste in the process. Xebec, also from Canada, is producing processing plants that can do this.

Evan Metcalf, Head of Product says the fund includes an ESG filter, using data from Minerva Analytics, that excludes companies involved in controversial weapons, small arms, gambling tobacco and fossil fuels, or which are non-compliant with the United Nations Global Compact. The fund also removes oil, gas and coal companies.

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