ASX Hydrogen Stocks: Top 10 Hydrogen Shares to Watch in 2023

Key highlights:

• Hydrogen is being recognised as a key component of the global energy transition, with many governments and companies investing in the development of hydrogen technologies. This presents significant growth potential for companies involved in the hydrogen value chain, from production to utilisation.
• Investing in hydrogen stocks can provide diversification benefits to investors' portfolios, particularly for those looking to gain exposure to the renewable energy sector. Hydrogen shares can also provide exposure to a range of industries, including energy, transport, and manufacturing, making them a potentially valuable addition to a diversified portfolio.
• Like any investment, investing in hydrogen stocks comes with risks. These risks include technological and regulatory uncertainty, competition from other low-carbon technologies, and the potential for volatility in the hydrogen market.

What are the biggest hydrogen companies in Australia?

Australia has several companies that are active in the hydrogen industry, ranging from producers and suppliers to technology developers and investors. Here are three of the biggest hydrogen companies in Australia:

1. Woodside Energy ($WDS): Woodside is a major energy company that is exploring hydrogen as a potential future fuel source. The company is involved in several hydrogen projects, including a pilot plant in Western Australia that uses solar power to produce hydrogen from water.
2. APA Group ($APA): APA is Australia's largest natural gas infrastructure company and is investing in the development of hydrogen pipelines and related infrastructure. The company has several hydrogen-related projects underway, including the HyEnergy Zero Carbon Hydrogen project in Western Australia.
3. Fortescue Metals Group ($FMG): Fortescue is an iron ore mining company that is also investing in hydrogen production. The company plans to use renewable energy sources to produce hydrogen that can be used to power its mining operations and also potentially export it.

Overall, the sentiment towards hydrogen in Australia is positive, with the Australian government and industry leaders recognising the potential of hydrogen as a low-emissions fuel source that can help decarbonise the economy. The government has announced funding for hydrogen projects and is working on developing a national hydrogen strategy. The industry is also investing in hydrogen research and development, with several companies exploring different methods of producing and using hydrogen.

Top 10 hydrogen stocks on ASX

Data as of 17 April 2023.

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Discover the top hydrogen stocks on the ASX

1. Fortescue Metals Group Ltd ($FMG)

Market capitalisation: $69.30b

Stock price (as of 17/04/2023): $22.51

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 59% / 41%

FMG is a global leader in iron ore mining and exploration. The company has recently made significant investments in renewable energy and green hydrogen. FMG plans to build a 250 MW green hydrogen plant in Western Australia, which will be powered by solar energy and used to produce hydrogen for export.

💡Related: How to Buy Fortescue Metals Group (FMG) Shares→

2. Woodside Energy Group Ltd ($WDS)

Market capitalisation: $65.94b

Stock price (as of 17/04/2023): $34.73

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 64% / 36%

WDS is one of Australia's largest natural gas producers and has recently been exploring both blue and green hydrogen technologies. The company is working on a pilot project that uses natural gas to produce hydrogen with carbon capture and storage.

3. Santos Limited ($STO)

Market capitalisation: $16.02b

Stock price (as of 17/04/2023): $7.32

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 61% / 39%

Santos is another major Australian natural gas producer that is investing in blue hydrogen production. The company is planning to produce hydrogen from natural gas with carbon capture and storage at its Moomba plant in South Australia.

4. AGL Energy Limited ($AGL)

Market capitalisation: $5.83b

Stock price (as of 17/04/2023): $8.67

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 60% / 40%

AGL is a leading Australian electricity and gas retailer that is investing in both blue and green hydrogen. The company is working on a project to produce clean hydrogen from natural gas with carbon capture and storage at its Loy Yang power station in Victoria.

🆚 Compare AGL vs ORG stock comparison→

5. Origin Energy Limited ($ORG)

Market capitalisation: $14.26b

Stock price (as of 17/04/2023): $8.28

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 51% / 49%

Origin is another major Australian energy company that is investing in green hydrogen. The company is working on a project to produce hydrogen from renewable energy sources at its Eraring power station in New South Wales.

6. APA Group ($APA)

Market capitalisation: $12.08b

Stock price (as of 17/04/2023): $10.24

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 72% / 28%

APA is an Australian energy infrastructure company that is investing in blue hydrogen energy storage. The company is exploring the use of natural gas pipelines to transport hydrogen produced from natural gas with carbon capture and storage.

7. Worley Ltd ($WOR)

Market capitalisation: $8.12b

Stock price (as of 17/04/2023): $15.48

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 40% / 60%

Worley is a global engineering company that provides services to the energy, chemicals, and resources industries. The company is involved in several green hydrogen production projects, including the development of a green hydrogen plant in Western Australia.

8. Ampol Limited ($ALD)

Market capitalisation: $7.39b

Stock price (as of 17/04/2023): $31.02

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 59% / 41%

Ampol is a leading fuel retailer in Australia that is investing in hydrogen as a low-emissions fuel and renewable power source. The company is working on several hydrogen projects, including a trial to produce hydrogen from renewable energy sources at its Lytton refinery in Queensland.

9. Hazer Group Limited ($HZR)

Market capitalisation: $120m

Stock price (as of 17/04/2023): $0.71

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 49% / 51%

Hazer is an Australian technology company that has developed a low-emissions process for producing hydrogen and graphite from methane. The company is working on several pilot projects, including a plant in Western Australia that will produce hydrogen for use in fuel cell vehicles.

10. ADX Energy Ltd ($ADX)

Market capitalisation: $12m

Stock price (as of 17/04/2023): $0.01

Stake platform bought / sold (1 Jan 2023 - 17 Apr 2023): 38% / 62%

ADX Energy is an Australian exploration and production company focused on oil and gas resources. The company primarily operates in Europe, with a particular focus on Italy, and is actively exploring opportunities to expand its operations in the region. While ADX Energy does not currently have any investments in hydrogen, it has expressed an interest in exploring opportunities in the hydrogen market.

What is the difference between blue hydrogen and green hydrogen?

The main difference between blue hydrogen and green hydrogen is how they are produced and their associated carbon emissions.

Green hydrogen is produced through a process called electrolysis, which uses electricity from renewable sources such as wind or solar to split water molecules into hydrogen and oxygen. This process does not emit any carbon dioxide (CO2) and produces only water as a byproduct. As a result, green hydrogen is considered a zero-emissions fuel.

Blue hydrogen, on the other hand, is produced from natural gas through a process called steam methane reforming (SMR). During SMR, natural gas is mixed with steam and heated, causing a chemical reaction that produces hydrogen and carbon dioxide (CO2). The CO2 is captured and stored or utilised in industrial processes, which can reduce its overall emissions. While blue hydrogen is not a zero-emissions fuel, it can be considered a low-carbon fuel because the emissions associated with SMR can be offset through carbon capture and storage (CCS) or utilisation (CCU).

Summing it up, green hydrogen is produced from renewable energy sources and is considered a net zero emissions no-emissions fuel, while blue hydrogen is produced from natural gas with carbon capture and storage, and is considered a low-carbon fuel.

Which Australian companies are investing in blue hydrogen?

Here are some Australian companies that are investing in blue hydrogen:

• Santos ($STO)
• Woodside Energy ($WDS)
• APA Group ($APA)
• Hexagon Energy Materials ($HXG)
• Eden Innovations ($EDE)
• Pilot Energy ($PGY)

Which Australian companies are investing in green hydrogen?

Here are some Australian companies that are investing in green hydrogen technology:

• Fortescue Metals Group ($FMG)
• Origin Energy ($ORG)
• Global Energy Ventures ($GEV)
• Lion Energy ($LIO)
• Montem Resources ($MR1)
• Province Resources ($PRL)
• QEM Limited ($QEM)

Hydrogen stocks FAQs

Are ASX hydrogen shares a good investment?

Investing in companies related to hydrogen can be a good opportunity for investors who are interested in the potential of hydrogen as a low-emissions fuel source. However, as with any investment, there are both risks and opportunities to consider.

On the positive side, hydrogen is gaining attention as a key solution for decarbonising industries such as transport, energy, and manufacturing. This increased global demand for hydrogen could create new investment opportunities in the sector, including companies that produce, distribute, and utilise hydrogen.

However, the hydrogen industry is still relatively nascent, and many companies are still in the early stages of development. This means that there is a higher degree of uncertainty and risk associated with investing in hydrogen shares, particularly for companies that are not yet profitable or have a limited track record.

It's important for investors to conduct thorough research and due diligence before making any investment decisions. This includes analysing a company's financials, understanding its business model and strategy, and evaluating the competitive landscape and market trends.

Are there any hydrogen ETFs to invest in?

There are several hydrogen ETFs listed on the ASX that investors can consider. Here are a few examples:

• BetaShares Global Sustainability Leaders ETF ($ETHI): This ETF invests in a portfolio of companies with strong environmental, social, and governance (ESG) practices, including exposure to companies involved in renewable energy, energy efficiency, and low-emissions technologies such as hydrogen.

• Global X Battery Tech & Lithium ETF ($ACDC): This ETF invests in a portfolio of companies involved in battery technology, renewable energy, and other low-carbon technologies, including hydrogen.

• Global X Hydrogen ETF ($HGEN): This ETF is focused specifically on the hydrogen industry and invests in a global portfolio of companies involved in hydrogen production, storage, and distribution.

It's important for investors to conduct their own research and due diligence before investing in any ETF. This includes analysing the ETF's investment strategy, fees, performance history, and underlying holdings in the portfolio.

This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking appropriate financial or taxation advice before investing.