The Race to Hydrogen Goes Beyond Brexit With Italy-U.K. Deal

Europe’s largest gas pipeline company will invest in a U.K. firm at the heart of the hydrogen market, which could be worth many trillions in the next few decades.

Italy’s Snam SpA will brush aside Brexit and invest 33 million euros ($39 million) in ITM Power Plc, which produces electrolyzers, a crucial component in the hydrogen technology. The investment is part of a 150-million pound ($197 million) capital increase by ITM.

The accord is part of Snam’s expansion in the technology after the European Union put hydrogen at the heart of its measures to cut greenhouse gases and become climate neutral by 2050. Hydrogen, if made with renewables, could replace coal, oil, and eventually natural gas, and help eliminate about a third of emissions from industries like steel and cement by mid-century, according to BloombergNEF.

“The hydrogen sector is like the internet before the dot com boom,” Marco Alvera, chief executive officer of Snam, said in an interview. “What matters now is to unlock potential technology and to find the right positioning.”

The partnership goes beyond its economic value. Snam will also support the ITM brand on commercial activities, research and development of projects. Electrolyzers could potentially be used in Snam’s pipeline of projects and hydrogen could become competitive with certain fossil fuels in five years, Alvera said.

Goldman Sachs Group Inc. estimates that the hydrogen market could be worth 10 trillion euros by 2050 globally for utilities alone.

Snam announced Wednesday a partnership with state-railway company Ferrovie dello Stato Italiane SpA to work together on hydrogen-powered train technology.

©2020 Bloomberg L.P.

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