Green fuels are a no regret investment opportunity

2023.04.21

You can’t do anything wrong – as long as you do something!

That is the valuable piece of advice we get if we are going to perform lifesaving first aid. Something along the same lines applies if investors want to invest in green fuels. Even if it can be scary and uncertain and you have never tried it before. If we look just a few years ahead, it almost doesn’t matter what you embark on – you will be cash-flow positive. It can certainly be optimised, but there will be plenty of no-regret investments.

We have been pouring fossil fuels on ships, planes and in our industries for over a hundred years, so the market is well known. On the other hand, it is still debatable whether green power, hydrogen, ammonia, methanol or sustainable aviation fuels (SAF) is the most optimal to produce in the future. But one thing is certain – the market will crave whatever is produced. 

Global fossil energy consumption has more than doubled over the past 40 years and is now enormous. A staggering 123,000 TWh of fossil energy is consumed annually, equivalent to 5.6 trillion LED bulbs. We are all aware that consumption of this magnitude is not sustainable and will only lead to one disaster after another. Therefore, the vast majority of countries have set targets for climate neutrality – several even as early as 2045. In other words, we need to make things more efficient and find alternatives on a massive scale. 

COWI expects Germany, the Netherlands and Belgium alone to have a total demand for solutions based on green hydrogen in 2050 of 504 TWh. In comparison, Denmark is expected to be able to produce and sell 195 TWh of green hydrogen at a competitive price in the same year. These are large amounts – not least considering the amount of green power needed for this. 

It is, of course, crucial that the binding climate targets are not just a set-and-forget strategy. If the climate targets are not taken seriously or can be disregarded for immediate convenience, we may risk seeing a continued demand for fossil solutions drilled in the North Sea or in fragile nature in Alaska. But if both politicians and voters keep their hands on the wheel, then the massive transition is inevitable, as well as the consequent great demand for all sustainable solutions – even if some will be a little more expensive than others.