A report from the Commerzbank Research Centre indicates that hydrogen's significance as a carrier of energy and in achieving climate goals is increasing. The bank forecasts that demand for platinum will rise as the hydrogen economy grows, citing data from the World Platinum Investment Council (WPIC) that predicts demand for platinum in hydrogen production will increase from last year's 48,000 ounces to 2.7 million ounces by 2030.
Carsten Fritsch, a commodity analyst at Commerzbank, the report's author, states that hydrogen fuel cell vehicles are just a part of the expanding hydrogen fuel market, with hydrogen applications expected to account for one-third of total platinum demand by the end of this century. WPIC suggests that although current platinum demand related to hydrogen is small, it is expected to reach 35% of annual platinum demand by 2040.
Hydrogen produced from fossil fuels is mainly used for refining crude oil, producing ammonia for fertilizers, and manufacturing methanol for paints and plastics. Future applications aim at carbon-intensive industries such as steel manufacturing and transport. In shipping engines and aviation, hydrogen also plays a role in balancing grid fluctuations and might even become a substitute for natural gas ultimately.
Although the growing hydrogen economy is expected to be a strong source of new demand for platinum, platinum prices have yet to gain new, significant bullish momentum. Fuel Cell Electric Vehicles (FCEVs), despite their growth, are of a scale that temporarily cannot provide substantial support for platinum prices.
Commerzbank points out that investors should pay attention to Europe's developing hydrogen economy, with Germany emerging as a world leader in this new economy. By the end of 2022, Germany had the most hydrogen refueling stations in Europe, totaling 105. The country plans to establish a 1,800-kilometer network of upgraded or newly built hydrogen pipelines by 2027 to 2028 and connect all major power generation, import, and storage hubs with related end users by 2030. Another pilot project in Germany involves using up to 200 hydrogen fuel cell taxis manufactured by Toyota Mirai in Berlin.
Commerzbank explains that the European Union aims to increase the annual demand for green or renewable hydrogen to 20 million tons by 2030. The latest regulations from the European Parliament indicate that hydrogen must account for 42% of industrial shares in EU member states and at least 1% of the transport sector. Bloomberg estimates the new European regulations will generate up to 4.2 million tons of renewable hydrogen demand by 2030. The International Energy Agency predicts that nearly 100 million tons of low-emission hydrogen will be needed to achieve climate neutrality targets by the mid-century.
Across the Atlantic, the United States aims to produce 10 million tons of clean hydrogen annually by 2030, supported by $9.5 billion in funding from the Infrastructure Bill passed in 2021.
Fritsch suggests that with issues in the largest platinum-producing country, South Africa, and new platinum mining investments unlikely to be realized in the short term, the rising demand for platinum with increased hydrogen production can only be met through existing resources. One effective method is through recycling, with about a quarter of the global platinum supply currently being recycled. According to the Hydrogen Council, recycling of scrapped vehicles in the EU alone could meet 25% of the platinum supply needs of the hydrogen industry.
