Brian McCowan, Zondits staff, 12/9/2022
Goldman Sachs commodity analyst, Michele DellaVigna, has told CNBC that a combination of market forces and the recently enacted Inflation Reduction Act (IRA) are combining to make “green hydrogen” a profitable energy alternative. DellaVigna anticipates that green hydrogen will join renewable technologies, such as wind and solar, in a “turning point” for energy technologies.
Green hydrogen is commonly considered hydrogen gas that is produced using an electrolysis process powered by renewable energy. Electrolysis splits water molecules, separating them into their hydrogen and oxygen components. Most hydrogen today is produced with power produced from natural gas.
CNBC spoke with DellaVigna at the Goldman Sachs Carbonomics conference in late November, where he spoke about the future of green battery production, carbon capture, and green hydrogen as technologies that, boosted by the IRA, will soon be economically viable. He sees the IRA as “really a turning point on the economics” with multiple incentives including business tax credits for the production of green hydrogen.
Fortescue Metals, an Australian iron ore producer, also presented at the conference and made the case that Australia is poised to make major contributions in the transition to clean energy. The company anticipates that similar to the Australian export of iron ore, Fortescue and other firms from “down under” will be significant exporters of green hydrogen.
The Carbonomics event followed the COP27 Climate Change Summit where German Chancellor Olaf Scholz described green hydrogen as “one of the most important technologies for a climate-neutral world.”