(Kitco News) - The growing energy crisis in Europe is prompting politicians to look at new power sources and hydrogen could be a game changer for the region, helping push platinum prices to a five-week high.
Platinum is getting a boost as investors continue to digest last week's news that the European Union will create a new European Hydrogen Bank to bridge the investment cap between future supply and demand. October platinum futures last traded at $918.40 an ounce, up nearly 2% on the day.
In its announcement, Ursula von der Leyen, President of the European Commission, said that the bank is looking to invest €3 billion to develop the region's hydrogen market.
"Hydrogen can be a game changer for Europe. We need to move our hydrogen economy from niche to scale," von der Leyen said at the Sept. 14 press conference. "To achieve this, we must create a market maker for hydrogen, in order to bridge the investment gap and connect future supply and demand."
The E.C.'s development of a hydrogen bank is the latest step in the European Union's push for green sustainable energy, outlined in its REPowerEU plan, which was released in May. Under the plan, The E.U. is looking to build a supply of 20 million tonnes of green hydrogen by 2030.
According to some market analysts, the growing hydrogen economy could significantly shift platinum's supply and demand outlook. The precious metal is a critical component in electrolysis, the process used to separate water into hydrogen and oxygen molecules. Green hydrogen is produced using renewable energy like solar or wind power.
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The hydrogen economy currently represents a small part of platinum demand; however, it is quickly growing. In a report published last week, analysts at Metals Focus said that platinum demand in the hydrogen economy could surpass 100,000 ounces in 2023.
The World Platinum Investment Council sees hydrogen demand for platinum as an essential sector in demand for the precious metal.
"Platinum's role in unlocking hydrogen's crucial contribution to achieving global net zero targets is becoming widely known and offers an option to investors looking for exposure to this area. The drive in Europe to reduce gas imports from Russia, as well as the recent passing of the U.S.'s Inflation Reduction Act, places greater importance on the need for green hydrogen and provides further incentive for investment in the sector, which benefits platinum directly," Paul Wilson, CEO of the World Platinum Investment Council in the WPIC's second-quarter outlook report, which was published earlier this month.
