The Investment In Maritime Hydrogen Is Gaining Momentum

By Breakwave Advisors

Developing zero-emission maritime shipping solutions has become a hot topic because it could decarbonize a critical global supply chain input. Maritime transport is the most energy-efficient way to move commodities and finished goods around the globe when measured by tonne mile (moving one ton of cargo one mile), and ships account for carrying 85% of all global freight volumes.

Unlike passenger cars, electrification of deep-sea shipping is challenged by the energy density limits of battery technology. Energy density measures how much energy a given quantity of material stores, such as a battery or a liquid fuel. Energy density is not a key factor for decarbonization in many uses, such as stationary power generation or passenger vehicles that can replenish their energy after traveling relatively short distances. But for deep-sea shipping and aviation, energy density is a critical decarbonization factor. Diesel and jet fuel are particularly attractive energy sources for these modes of transportation because they contain the highest energy-to-weight ratio of nearly all fuels.

Batteries are an extremely important component of creating environmentally friendly, mass-produced passenger vehicles. This is possible due to the generally short distances traveled between recharging opportunities. So how is it possible to decarbonize a sector, like maritime shipping, that cannot depend on batteries to store energy? A likely solution is hydrogen and hydrogen derivatives produced using renewable electricity.

In a recent report titled ‘Net Zero by 2050’ published by the International Energy Agency, it was projected that maritime shipping will have the highest industrial adoption of hydrogen fuels. Ammonia, a hydrogen derivative usually thought of as a cleaning product, has the potential to become a fuel of the future due to its unique properties. Renewable hydrogen can produce ammonia but has a higher energy density when stored at room temperature. This makes it particularly attractive as a green fuel solution.

The Biden-Harris Administration recently announced its intent to issue $750 million in funding from President Biden’s Bipartisan Infrastructure Law to reduce the cost of clean hydrogen technologies. The funding will be necessary to boost investment in hydrogen production and distribution, which will need to grow seven-fold to support energy transition goals for 2050 according to the World Bank.

Hydrogen is the leading focus of pilot projects dedicated to developing zero-emission technology and infrastructure for deep-sea shipping according to the Global Maritime Forum, an organization committed to making commercially viable zero-emission vessels a scalable reality by 2030. Public and private enterprises worldwide are pursuing these projects across the technology and infrastructure value chains.

ETFMG Breakwave Sea Decarbonization Tech ETF (NYSE:BSEA) provides exposure to many of the companies involved in making hydrogen and ammonia viable shipping fuels, including: Aker Horizons (OTCPK:AKHOF) (Norway), Alfa Laval (OTCPK:ALFVF, OTCPK:ALFVY)(Sweden), Chart Industries (GTLS) (USA), GTT (OTCPK:GZPZF, OTCPK:GZPZY) (France), Nel (OTCPK:NLLSF, OTCPK:NLLSY) (Norway), New Fortress Energy (NFE) (USA), OCI (OTC:OCINF) (Netherlands), Royal Vopak (OTCPK:VOPKF, VOPKY) (Netherlands), Technip Energies (OTCPK:THNPF)(OTCPK:THNPY)(France), Wartsila (WRTBF, OTCPK:WRTBY) (Finland) and Yara (OTCPK:YRAIF, OTCPK:YARIY)(Norway).

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-800-889-1438), or by visiting www.etfmg.com/BSEA. Please read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the Marine Money Decarbonization Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.

The Index was created by and is owned and maintained by Maritime Transformation Partners, LLC (the “Index Provider”), which has not previously been an index provider, which may create additional risks for investing in the Fund.

Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.

Specific investments described herein do not represent all investment decisions made by Maritime Transformation Partners, LLC or ETF Managers Group LLC. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.

ETF Managers Group LLC is the investment adviser to the Fund.

The Fund is Distributed by ETFMG Financial, LLC, Member FINRA/SIPC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Maritime Transformation Partners, LLC or Breakwave Advisors LLC.

The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.