(This story is for CNBC PRO subscribers only.) After decades of false starts, hydrogen technology is poised to take off as falling production costs, technological improvements, and a global push toward sustainability converge, according to Bank of America. The firm believes this will generate $2.5 trillion in direct revenue — or $4 trillion if revenue from associated products such as fuel cell vehicles is counted — with the total market potential reaching $11 trillion by 2050. "Hydrogen … could supply our energy needs, fuel our cars, heat our homes, and help to fight climate change," the firm said in a recent note to clients. "We believe we are reaching the point of harnessing the element that comprises 90% of the universe, effectively and economically." The technology hasn't taken off to date for a variety of reasons, including that hydrogen is expensive to manufacture since it has to be produced using another energy source, as well as because it's less energy efficient than fossil fuels. Bank of America compared the sector to smartphones pre-2007 or the internet pre-dot.com, saying now is the time to look at it, "before it goes mainstream." Among the sectors that stand to benefit are industrials, infrastructure and renewables. Hydrogen is currently talked about in terms of color, which indicates the source of its production. Brown is from coal, grey is from natural gas, blue is from natural gas with carbon capture incorporated, while green hydrogen is produced when renewable-generated energy is used for electrolysis, which is the process of splitting water into hydrogen and oxygen. Green hydrogen has traditionally been prohibitively expensive at about seven times the cost of production via fossil fuels. Because of that 99% of hydrogen is currently manufactured from fossil fuels, but the falling cost of renewables means that it's now 50% cheaper to produce green hydrogen than it was five years ago Possible end markets for hydrogen includes fueling cars as well as heating and cooling buildings. Right now 80% of electricity comes from fossil fuels, but as the world shifts toward sustainable fuels — aided by government incentives — hydrogen could play a key role, accounting for 24% of energy demand by 2050, according to Bank of America. The firm noted that there are both short and long-term opportunities for investors, given the massive infrastructure overhaul that will be needed if hydrogen is to become mainstream. The most immediate opportunity lies in companies involved in electrolyzers given that the need to shift from grey hydrogen to green hydrogen is "urgent already this decade." Canada-based Hydrogenics, which is a division of Cummins , has more than 500 electrolyzers in use around the world, and the company is also involved in hydrogen fuel cell production. Munich-based Siemens Energy and Tokyo-based Toshiba are also involved in electrolysis. Further out, there's opportunity in companies that make fuel cells, since they are required to convert stored hydrogen back into electricity for use in vehicles, among other things. Companies involved in this arena include Bloom Energy , Ballard and Plug Power . "Long-haul vehicles like trucks, ships, and airplanes, where the electric battery vehicle technology cannot currently be replaced, could use fuel cell vehicles powered by hydrogen," noted Bank of America. Air Products is also involved in the hydrogen ecosystem through shipment and installation of fueling stations, while ArcelorMittal has announced plans to replace natural gas with hydrogen during the steelmaking process. Hydrogen's versatile nature means it can also be used for energy storage, as well as feedstock for chemical and manufacturing processes. However, Bank of America was quick to note that the success of hydrogen remains to be seen, and is dependent on a number of factors, including costs continuing to decline. "Hydrogen clearly has a role to play in achieving decarbonisation targets. The extent of that role depends on both developments in hydrogen technology and the scale and commercial viability of competing alternatives," the firm said. - CNBC's Michael Bloom contributed reporting. Don't miss CNBC and Institutional Investor's Delivering Alpha conference on September 30 , featuring Treasury Secretary Steven Mnuchin, Senator Elizabeth Warren, Alibaba's Joseph Tsai, Vista Equity Partners' Robert Smith, J.P. Morgan's Mary Callahan Erdoes, Inclusive Capital's Jeff Ubben and more.
