A global, clean energy transition. Hydrogen as an energy carrier will play an
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Plans/strategy| Date: 03/06/2020 | Ministry of Climate and Environment, Ministry of Energy
This hydrogen strategy is a contribution to the process of developing new low emission technologies and solutions. An increased focus on hydrogen in Norway is in line with the goal of having internationally competitive businesses which develop the technology and solutions addressing tomorrow''s challenges. We will grasp the opportunities presented by the green transition.
Hydrogen is an energy carrier with a significant potential for reducing local, national and global emissions, and for creating economic value for Norwegian businesses. If hydrogen is to be a low or zero emission energy carrier, it must be produced with low or zero emissions, for example through natural gas reforming combined with CCS, or from electrolysis of water using renewable electricity. Hydrogen presents exciting opportunities for Norway, as an energy nation and a technology nation.
Published by:Norwegian Ministry of Petroleum and Energy and Norwegian Ministry of Climate and EnvironmentPublication number: Y-0127 EPhoto front page: NEL ASADesign: Konsis Grafisk
Correction in graph 3.1 on page 25: Emissions from "The heating of private housholds and commerce" is 0.9 million metric tonnes of carbon dioxide equivalents (2 percent of total emissions).
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Hydrogen technologies continued in niche companies, but the second phase (2010–2019) was marked by low levels of political attention and industrial activity. For example, a major 2016 White Paper on Norwegian energy policy towards 2030 paid scant attention to hydrogen (Norwegian Government, 2016). The government''s strategy focused mainly on maintaining hydrogen research and on following the international development of hydrogen technologies and markets. For most uses, direct electrification based on Norway''s surplus of renewable energy generated mainly by hydropower was seen as preferable to hydrogen; in the road transport sector, electric vehicles and biofuels were emerging as the main climate solution.
By 2019, Norway was producing some 225,000 tons of ''grey'' hydrogen from gas reforming in industry, mainly for its own production of ammonia and methanol (DNV-GL, 2019). Two companies (Nippon Gases and Ineos/Rafnes) produced and distributed ''green'' hydrogen to the small-transport market, with only five hydrogen-fuelled buses and 140 registered hydrogen cars, and a mere five filling stations nationwide. In June 2019, a hydrogen filling station near Oslo exploded and injured two people, literally ''fuelling'' concerns over safety issues (TU, 2019). Low-carbon solutions for ships were underway, but hydrogen-based maritime coastal transport was yet to start operation.
From around 2019, Norway''s low-carbon hydrogen policies and activities began to gain traction, in line with increasingly ambitious climate policy agendas in the EU and Norway. Here we focus on the challenges and prospects for Norway''s internal and external hydrogen strategy in this third phase. The key internal issues to be examined are the policies, political priorities of technologies and end-use sectors, and their alignment with actual state-aid priorities. Further, we examine Norway''s international approach, its domestic basis and what this means for Europe.
Data for this study stem mainly from national expert reports, governmental white papers, research papers, media articles and interviews with the Norwegian Ministry of Energy.
In June 2020, the Norwegian government published a national hydrogen strategy, immediately prior to the launch of the EU''s hydrogen strategy (Norwegian Government, 2020). The Norwegian strategy is based on several perceived competitive advantages for production and distribution of hydrogen. These include industrial experience along the entire hydrogen value chain; large gas resources and the potential for increasing the production of renewable energy (hydropower in particular); the Norwegian petroleum industry''s expertise in handling large-scale industry projects; the CO2 storage potential at the Norwegian continental shelf, and the extensive experience in maritime industries along the value chain.
In 2021, as noted, the government published the hydrogen roadmap, intended to address the shortcomings of the criticised ''thin'' strategy. For the short term, by 2025, this roadmap aims at the establishment of: (1) five hydrogen hubs for maritime transport; (2) one or two industrial projects for hydrogen, to demonstrate value chains with global technology diffusion potential; and (3) five to ten pilot projects for demonstration of new, more cost-effective hydrogen solutions and technologies. The Norwegian Parliament also requested the government to focus more on facilitating large-scale ''green'' hydrogen production and to explore how ammonia production could be electrified (Norwegian Government, 2022a). We return to Norway''s long-term export-oriented strategy in the next section.
The main policy instruments envisaged for attaining the targets and visions consist of a combination of energy, climate, industry and research, and innovation policies (Norwegian Government, 2022a): increase public funding for the whole innovation chain based on existing institutionsFootnote 5; increase the CO2 tax from approx. € 60/ton–€ 200/ton by 2030,Footnote 6 in line with the national climate plan; develop zero-emissions public procurement standards, particularly for long-range ferries and other ships not suited for electrification; retain current tax benefits for hydrogen cars (as for electric cars) and exemption from consumer tax for electricity used to produce hydrogen through electrolysis; and increase funding to research, innovation and market introduction.
The government has also announced that it is giving consideration to establishing a system of Contracts for Difference to stimulate hydrogen value-chain development. Under such a system, the state would guarantee steady income to hydrogen frontrunners. Hydrogen stakeholders have increasingly called for more measures and programmes for scaling up and commercializing technologies—in particular, Contracts for Difference to help to promote a hydrogen market (Energi og Klima, 2020). Contracts for Difference have so far not been applied in Norway.
Political priorities roughly align with actual funding priorities. All the new political initiatives have propelled state-aided hydrogen activities and projects across the country (E-24, 2021). With regard to research, further upscaling came with the 2022 State Budget, when €31 million in funding was granted for two major new hydrogen R&D centres. Since 2020, there has been a massive increase in direct state aid to hydrogen projects—mostly to industry and maritime transport, with a declining trend in funding for road-based transport (see Fig. 1).
State aid to hydrogen projects in Norway 2015–2022.
In addition to industrial ''green'' and ''blue'' hydrogen demonstration projects, maritime transport is prioritised. In June 2022 for instance, Enova—the state fund for the green transition—granted €120 million in support to hydrogen investments in the maritime industries. This funding comprised the establishment of five production/infrastructure facilities along the coast, intended to facilitate further technological advancement, in addition to end-use by seven coastal vessels powered by hydrogen or ammonia (Enova, 2022a).
In January 2022, the first contract for the procurement of two long-range zero-emissions ferry boats was signed. These vessels were mandated to operate with a minimum hydrogen content of 85%. Additionally, a milestone was achieved in 2023, when a 15-year delivery agreement was established between a shipping company and a green hydrogen producer (Fauna, 2023).
Enova has granted support for 16 larger vessels with hydrogen or ammonia as their primary fuel sources, along with the establishment of five hydrogen hubs (Enova, 2023). It is noteworthy, however, that despite these concerted efforts, the industry remains challenged by the perception of elevated risks associated with hydrogen investments. The support scheme has yet (October 2023) to stimulate a substantial influx of investment decisions.
Enova now seeks to realize profitable value chains through two new support schemes ''Hydrogen in vessels'' and ''Ammonia in vessels'' (Enova, 2023). The schemes are planned to continue until 2026, with two calls per scheme each year, emphasising cost efficiency through ''competitive bidding''.
In the revised National Budget (June 2023) there were no signs of any firm hydrogen commitments; no funding has been set aside for a plan for the introduction of contracts for difference, nor for a nationwide network of hydrogen filling stations and hubs (Norwegian Hydrogen Forum, 2023).
Norway''s international hydrogen strategy mirrors the domestic strategy in that it is directed towards export of ''blue'' hydrogen in the long term and development of technology related mainly to the maritime and industrial sectors. Norway''s ''blue'' hydrogen focus is on European markets, with initiatives linked to the North Sea area. In 2022, there was virtually no production of ''blue'' hydrogen in Norway.
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