The natural gas sector has not had a good week after Shell was ordered by a court in the Hague to slash its carbon emissions by 45 per cent before the end of 2030.

Shell has substantial liquefied natural gas assets in Australia and there is every reason to believe that its local operations will come under the microscope as well.

While the supermajor plans to appeal the judgement, it is telling that the company has just awarded WorleyParsons (ASX:WOR) with a services contract to support the development of a new 200 megawatt electrolysis-based green hydrogen plant in Rotterdam.

A clear sign that it is setting the stage for a move away from fossil fuels even if its appeal is successful.

It’s not the only supermajor facing some very tough questions ahead.

ExxonMobil is set to field those questions from its own board after a small activist fund focussed on the company’s poor performance and its failure to adapt to a decarbonised world secured enough support from shareholders to secure two seats.

Likewise, Chevron investors have voted in favour of a proposal to reduce the company’s Scope 3 emissions though they did not approve a separate proposal that would require it to report on how a significant reduction in fossil fuel demand would affect its business.

Given that both supermajors also have significant Australian natural gas assets, it is not hard to see why the ABC has questioned if the government’s gas-fired recovery has run out of steam before it even began, a point that this column has raised previously.

This is the (hydrogen) way

So what’s a company to do instead of venturing down the natural gas route?

Taking a page out of Shell’s playbook and invest into hydrogen seems to be a pretty good idea if the response investors have to such moves is anything to go by.

Shares in Prominence Energy (ASX:PRM) climbed 45 per cent yesterday after acquiring a 20 per cent stake in Patriot Hydrogen, which is building a biomass to hydrogen plant at Port Anthony in Victoria.

The hydrogen plant is expected to take around 12 months to be built, commissioned and reach steady state production.
Patriot will licence, build and develop “Patriot 2 Hydrogen” (PH2) branded units for biomass to hydrogen plants within Australia.

The same was also true for Hexagon Energy Materials (ASX:HXG), which saw its shares climb early this year after investors had the opportunity to digest its acquisition of unlisted hydrogen play Ebony Energy.

Other factors that lend itself to supporting the push towards hydrogen is the strong backing from the Australian Federal and State governments for hydrogen projects.

The expanded remit of the Australian Renewable Energy Agency to include a wider range of clean energy technologies may seem tilted towards the Federal Government’s preference to reduce emissions from existing fossil fuels, but there’s also a strong remit for hydrogen – with the caveat that the changes were made with blue hydrogen in mind.

It appears all but certain that hydrogen is now in its ascendency but the actual pace of the transition from fossil fuels is far from certain.

At Stockhead we tell it like it is. While Hexagon Energy Materials is a Stockhead advertiser, it did not sponsor this article.