The Hydrogen Optimists – Often in “La La Land” and Always Unhelpful

Key Points

We have done substantial work on the perils of business optimism in the past and the underlying problem is the misallocation of capital and the negative impact on returns.
While this work was focused on large public industrial and material companies we see corollaries in hydrogen, today, as excessive optimism at the start-up companies at the subsidizing governments is wasting capital.
Green hydrogen delays will expose the premature spending, weakening results for the larger established companies and likely sinking the over-levered newcomers. Delays are driven by permitting and economics.
Otherwise we look at a hand full of projects, none of which will work without subsidies or premium pricing, we also look at the US ammonia advantage, and China’s power, hydrogen, and ammonia opportunity in Africa.

Exhibit 1: This analysis shocked many companies when it was published – optimist overspend and underperform.