&#34;Shorting some hydrogen&#34; is not an isolated case. The questioning of the commercial model of hydrogen energy has put clean hydrogen stocks in an awkward position worldwide.
Barry Norris, the founder and chief investment officer of hedge fund Argonaut Capital Partners LLP, stated that hydrogen energy is a failed bet and has &#34;shorted some hydrogen.&#34; He also added that he doubts the effectiveness of the business models of many such companies.
The Solactive Global Hydrogen Index has fallen more than 20% this year and has dropped 70% since its peak in November 2021.
The main criticism of hydrogen stocks comes from their high processing costs. Current hydrogen production is mainly based on fossil energy, but as the global low-carbon transition accelerates, clean hydrogen represented by green hydrogen and blue hydrogen is rapidly developing. Green hydrogen, which is produced by electrolysis of water powered by renewable energy, is currently the most promising and cleanest method of hydrogen production, but it is costly.
On the other hand, the utilization rate of clean hydrogen capacity is also not high. Norris believes that the utilization rate of hydrogen production relying on renewable energy generation will be much lower than that of hydrogen production based on base-load electricity.
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&#34;If you have such a large capital expenditure to build electrolyzers and they rely on wind and solar, you will find that the capacity utilization rate is equivalent to 30% to 40% of the wind and solar capacity utilization rate.&#34;
&#34;If they are powered by wind and solar, they will never be cost-competitive. What's the point if they are not driven by wind and solar?&#34;
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According to media reports, the US and other governments have announced over $280 billion in subsidies to the low-carbon hydrogen industry, a fourfold increase since 2021.
According to BloombergNEF analysts, the number of low-carbon hydrogen project announcements has increased by 58% since the IRA became law in the US a year ago. In August last year, the US Congress passed the Infrastructure Investment and Jobs Act (IRA), which focused on climate and new energy investments, as it stipulated that the US government would invest $400 billion over the next decade in reducing carbon emissions and explicitly support the production of clean energy domestically.
The policy momentum continues to this day, and electrolyzer manufacturers are starting to acknowledge that their &#34;optimism has been somewhat excessive and expansion is slowing down.&#34;
&#34;In recent times, the valuations of green hydrogen-related stocks have already reflected the efficient and rapid policy transition supporting green hydrogen,&#34; said Ian Simm, CEO of Impax Asset Management Group, who also holds a cautious view on the short-term prospects of hydrogen energy. &#34;But this may be too optimistic.&#34;
He stated that the US government's climate bill is a &#34;potential game-changer&#34; for hydrogen energy, but there is still &#34;significant uncertainty&#34; about how subsidies will work in practice. Regarding the future expectations for hydrogen energy, Simm said:
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&#34;We are very optimistic about the prospects of hydrogen energy in the next 10 to 15 years, as it is one of the key ways for us to achieve decarbonization of industrial heat.&#34;
&#34;However, in the short term, it is indeed difficult to see the demand rapidly expanding to the scale of our investment.&#34;
&#34;The main obstacle is the limited visibility of a scalable and clear business model.&#34;
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Investors are pessimistic about the short-term prospects of hydrogen energy due to its high cost and low return on investment.

Business Model Doesn't Work? Hedge Fund Giant Publicly Shorts US Hydrogen Energy Stocks