Plug Power Surges on Amazon Deal to Supply Green Hydrogen

(Bloomberg) -- Amazon.com Inc. agreed to buy enough carbon-free hydrogen from Plug Power Inc. to run 30,000 forklifts or 800 long-haul trucks annually in a push to use less fossil fuel. Plug’s shares surged. 

Plug will supply the retail giant with almost 11,000 tons of green hydrogen, which is produced with renewable energy, annually starting in 2025, according to a statement Thursday. The company’s shares rose as much as 14.7%. They were up 7.8% at 10:39 a.m. in New York.

Amazon has long used Plug’s hydrogen-powered forklifts in its operations. But Plug is now pivoting to become a major supplier of hydrogen itself, betting that the fuel will become crucial in a low-carbon future. The company, based in Latham, New York, signed a similar supply agreement with Walmart in April. 

Previously: Walmart Will Run Forklifts on Green Hydrogen in Plug Power Deal

Green hydrogen is made using wind or solar energy to power a device called an electrolyzer, which splits water into hydrogen and oxygen without emitting greenhouse gases. Reducing those emissions is necessary to avoid the worst effects of global climate change.  

Amazon has pledged to become a “net zero” emitter of carbon by 2040, including by reducing its own emissions and backing forest preservation and other projects that offset any greenhouse gases it’s unable to eliminate. The company, the corporate largest buyer of renewable power in recent years, has pledged to equip its last-mile package delivery fleet with electric vehicles and reduce waste, among other projects.

As part of the agreement, Amazon acquired the right to buy 16 million Plug shares. Amazon often acquires such warrants in deals with suppliers, an effort to share in the financial windfall that working with one of the country’s most prominent companies can bring. The stake vests automatically if Amazon spends $2.1 billion on Plug Power products over seven years.

Amazon announced its climate goals in 2019. Its greenhouse gas emissions are up roughly 40% since then.

(Adds details of deal in third paragraph and background on Plug Power in paragraph five.)

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