A new hydrogen ETF just listed on the ASX today
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This morning the ASX ETF sector welcomed its first fund primarily focused on hydrogen.
Interest in hydrogen – particularly green hydrogen – has taken off in recent months in Australia as the world transitions towards renewable energy and various countries strive for “net zero” emissions.
The ASX is home to a handful of small caps looking to enter the hydrogen space but until 10am this morning it has not hosted a specific ETF offering exposure.
Today that changed as ETF Securities launched the ETFS Hydrogen ETF (ASX:HGEN).
ETF Securities’ Kanish Chugh said there was increasing investor interest in the hydrogen space.
“With hydrogen it’s an interesting area because it’s very much a mega-trend, it’s a greenfield investment opportunity,” he told Stockhead.
“We’ve seen a lot of interest in our battery technology ETF. Investors are interested in that idea of green technology but don’t want look at broad exposure — they’re happy to consider individual drivers and approaches to it.”
“There’s a lot of talk about it at the moment. Australia is well placed in the hydrogen industry to drive some of the growth of that, but that’s where the future needs to be.”
“When we’re thinking of net zero emissions and how we get there – battery technology is one way and in some respects it will drive us to that goal but hydrogen is another area when you think of industrial capacity – things like feedstock or steelmaking, commercial shipping, planes – that’s where the hydrogen industry can develop and assist in helping us get to net zero emissions.”
The HGEN ETF will track the Solactive Global Hydrogen ESG Index, which is a basket of 30 companies in the hydrogen space globally.
But Chugh says some of these companies offer exposure to other green energy themes too, naming Nel ASA (FRA:D7G) as one.
Nel ASA produces hydrogen from water and has the world’s largest factory that makes hydrogen refuelling stations, which top up the tanks of hydrogen powered tanks and cars.
“People often look at it and say ‘Do I go battery technology, do I do hydrogen or can I merge the two together’ and I think with a company like NEL they’re working with Nikola, one of the competitors to Tesla, to produce electrolyses at their refuelling stations so they’re widening infrastructure,” he said.
“Another is PLUG (NDQ:PLUG) which makes fuel cells, they turn hydrogen into energy and some of their customers include Amazon, Home Depot and Walmart. They’re focused on electric forklifts and they’re working towards expanding their value chain – they’re acquiring green hydrogen producers.”
“It’s quite diverse so when you’re thinking about mega-trends it has to be agnostic to country, agnostic to sectors – so that’s very much the case here.”
Chugh also says the underlying index has ESG screening built into it — thereby excluding companies involved in oil on the side and companies still involved in “brown” hydrogen which still causes emissions.
“We wanted to get as pure as possible, where the industry is headed [to] green hydrogen. It’s not 100% there yet but is well positioned to being there.”