1 Background and Introduction

In 1927, the Norwegian company Norsk Hydro started production of ‘green’ hydrogen as input to ammonia and fertiliser production from electrolysis, based on Norway’s rich hydropower resources. Norsk Hydro’s production of hydrogen from electrolysis was gradually replaced by the cheaper method of producing hydrogen from re-formation of natural gas, as sizable gas resources had been discovered in the North Sea. However, Norsk Hydro continued to develop and manufacture electrolysis technologies for the world market through the company Nel, which has since become a leading global hydrogen technology company based on renewable sources (Hydro, 2021). In 1996, the Norwegian Hydrogen Association (NHA) was established—currently it has some 60 members from industry, universities, and research institutes. These actors and institutions have been involved in international hydrogen research programmes under the International Energy Agency (IEA) and the EU’s framework programmes since their inception (SINTEF, 2020).

Since the turn of the twenty-first century, Norway’s hydrogen strategy and activities have undergone at least three phases. In the first phase (2000–2010), several hydrogen initiatives were introduced, with support from the Norwegian Research Council and state-aid programmes (NFR, 2020). In 2004, Norsk Hydro and Enercon established the world’s first ‘hydrogen society’ on the island of Utsira off the southwestern coast, with the aim of demonstrating how isolated communities could become energy self-sufficient. This demonstration project, based on wind power and fuel cells, attracted worldwide attention, but was terminated in 2010 due to technical inefficiency and poor commercial prospects (DN, 2008; SINTEF, 2020). Perhaps the most notable project in this phase was HyNor, a joint Statoil/Equinor and Norsk Hydro undertaking aimed at demonstrating various production technologies in the use of hydrogen cars and fuelling stations connecting Oslo and the city of Stavanger. However, with the financial crisis and the emerging market for electric vehicles in Norway, among other factors, HyNor was terminated in 2009 (SINTEF, 2020).

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.

As yet, there is no regular market for low-carbon hydrogen—neither in Norway nor abroad. Norway's major oil and gas industry has the potential to supply ‘blue’ hydrogen based on reforming natural gas with carbon capture and storage (CCS), but such production has not yet been established. Norway’s natural gas export through pipelines amounted to around 117 billion m3 (2017) of gas intended for terminals in Belgium, France, Germany, and the UK, enough to cover about a quarter of Europe’s needs, and potentially enough to produce approximately 25 million tons of hydrogen (DNV-GL, 2019). Norway has been among the few European countries to advance its CCS development, extracting CO2 from natural gas and storing it on the continental shelf. The world’s largest test centre for CCS technologies was established in 2012 at Mongstad, with Equinor and Shell as key partners. After some political vacillation, the government co-funded the establishment of the Northern Lights project on infrastructure for CO2 storage on the Norwegian continental shelf, designed to develop the world’s first open-source CO2 transport and infrastructure for delivering carbon storage as a service (Gassnova, 2023). This was expanded into the ‘Longship’ wider policy initiative, which in addition to Northern Lights included carbon capture (Ministry of Petroleum & Energy, 2020).

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.

2 Norway’s Hydrogen Strategy: Internal Dimension

2.1 Strategy and Policies

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.

However, the government’s 2020 strategy was criticised for being merely a description of the status quo rather than a full-fledged action plan with specific goals; it was also noted that no new policy measures were proposed (TU, 2020a). The government responded by issuing a hydrogen roadmap in 2021, backed up by increased state-funding for hydrogen research and industry projects (Norwegian Government, 2021a). This hydrogen strategy and roadmap laid out the development of low-carbon hydrogen (emission-free or close to emission-free) from electrolysis of water from renewable energy (‘green’), and natural gas with carbon capture and storage (CCS) (‘blue’). In contrast to the EU’s ‘green’ hydrogen approach, Norway has taken a technology-neutral approach linked to reducing emissions. Two end-use sectors have been prioritised: maritime transport and energy-intensive process industries. In the maritime sector, the government and industry have pursued various technologies for different types of vessels, including full electrification and biogas. Hydrogen and ammonia are deemed most suitable for large, long-distance vessels (Norwegian Government, 2019a).

Climate concerns appear as the predominant motivation underlying the Norwegian hydrogen strategy and roadmap, with industrial value creation as an additional key goal. The hydrogen strategy was initiated by the Conservative Party-led government—more specifically, the Ministry of Climate and the Environment, and the Ministry of Energy. The strategy was based on Norway’s energy mix, industry structure and research competence, and was placed in the context of the hydrogen strategies of European and other countries, the European Green Deal and the Next Generation EU recovery plan in response to Covid-19. Industrial interests also shaped Norway’s hydrogen initiatives. Equinor, with strong interests in natural gas and CCS, is by far the largest company in Norway, with 67% state ownership. In the first 2019 public consultation on the hydrogen strategy, Equinor argued that that the strategy should prioritise the maritime sector and contribute to large-scale ‘blue’ hydrogen based on natural gas and CCS (Equinor, 2019).Footnote 1 The company followed up in its 2020 position paper to the roadmap, stressing that a necessary condition for ‘blue’ hydrogen is a value chain for CCS—under preparation within the Longship and Northern Lights projects (Equinor, 2020).Footnote 2 Moreover, large stakeholders such as Equinor and Statkraft have ownership interests in both ‘blue’ and ‘green’ hydrogen technologies, and represent key drivers alongside technology providers.

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.

When a Labour Party-led government took office in October 2021, replacing the Conservative Party-led government, its main contribution to the hydrogen strategy and roadmap was to link national hydrogen production and consumption more directly to ambitious new national climate targets (Norwegian Government, 2022a).Footnote 3 Process industries represent a significant source of national emissions with a major potential for reduction through low-carbon hydrogen; by contrast, the maritime emissions from ferry boats and high-speed water vessels for civilian use are relatively minor, which reflects technology development ambitions particularly in the maritime sector (Norwegian Government, 2019b, and Norwegian Government, 2022e).Footnote 4 In 2022, the government also strengthened its industrial value-creation ambitions by releasing a roadmap and future vision for ‘green’ industry development. Here, hydrogen figured on the list of seven priority areas, which included offshore wind, batteries, maritime industries, CCS, bioeconomy and process industries (Norwegian Government b; c, 2022b, 2022c).

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.

2.2 Funding Activities and Challenges

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).

Fig. 1
A stacked bar graph plots the M E U R versus the years from 2015 to 2022. The highest bar for other sector and uses, industry, and maritime transport is in 2022 and road transport is in 2018.

Source Enova SF/Heilo, https://www.enova.no/heilo/hydrogen/stotte-til-hydrogenprosjekter/

State aid to hydrogen projects in Norway 2015–2022.

Full size image

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).

Uncertainties about low-carbon hydrogen competitiveness, technologies and costs, infrastructure, markets, transport, and safety permeate the hydrogen strategy. Due to Norway’s already high degree of electrification based on renewable energy, the demand for low-carbon hydrogen to reduce emissions may be more limited than the case in many EU member states. Furthermore, electrolysis is significantly more energy-demanding than direct electrification (Home & Hole, 2019).Footnote 7 Thus, ‘green’ hydrogen production will increase the demand for renewable power and grids, and raise electricity prices (Larsen and Dupuy, 2023). Earlier forecasts and expectations of Norway’s renewable power surplus have changed rapidly with more ambitious climate targets and net-zero industry ambitions, along with political pressure to develop more renewable electricity. However, there has been strong public opposition to building more renewable energy in Norway, due to trade-offs with land use and nature protection. This has been clearly illustrated by the massive local opposition to land-based wind power (Skjærseth & Rosendal, 2022).

3 Norway’s Hydrogen Strategy: External Dimension

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.

By 2050, Norway’s hydrogen roadmap envisions a well-established market for hydrogen serving the sectors of maritime transport, process industry and heavy vehicles. By that timepoint, Norwegian industry is expected to be a world-leading exporter of hydrogen, technologies and solutions (Norwegian Government, 2021a). Establishing international markets and export are seen as crucial priorities, particularly for the development of ‘blue’ hydrogen value chains requiring large investments in major facilities and infrastructure for both gas and CCS. As noted above, the state-sponsored CCS projects for capture, transport, and storage of CO2 (Longship and Northern Lights) might ultimately facilitate production of ‘blue’ hydrogen for a European market. This initiative has received some €2.5 billion in support, which is likely to increase. The goal here is to establish an operational transport and storage network by 2025, with national CO2 storage customers as well as European users. By contrast, ‘green’ hydrogen production is regarded as involving quite different economies of scale, with smaller production units serving national demand. A basic premise for this long-term strategy is that future demand will come mostly from international markets outside of Norway (Norwegian Government, 2020). Main priorities here are engagement in the emerging EU regulatory framework, the involvement of industry in projects abroad, and international cooperation on research, standard-setting, transport and markets.

3.1 The EU and Norway

European markets are highly important to Norway. The EU’s hydrogen strategy and emerging policies both align with and diverge from Norway’s approach. Although Norway is not an EU member, it is closely tied to EU climate and energy policies through the European Economic Area agreement. Indeed, Norway has a long-standing energy dialogue with the EU. Both the EU and Norway emphasise their mutual interests in achieving climate neutrality and promoting ‘green’ industrial growth based on the EEA agreement. However, Norway was not included as a priority partner in the initial EU hydrogen strategy that prioritised renewable ‘green’ hydrogen, which provoked some domestic political reactions (TU, 2020c). Recently, however, the EU and Norway have intensified their energy dialogue through a Norway-EU Green Alliance which includes ‘blue’ hydrogen as a transitional mode of production (Green Alliance, 2023). In February 2022, Norwegian Prime Minister Jonas Gahr Støre met with the President of the European Commission Ursula von der Leyen and EU Executive Vice President Frans Timmermans to discuss enhanced cooperation on climate, energy and industrial transformation to leverage green industry, renewable energy, hydrogen and CCS (EnergyLive, 2022).Footnote 8 This Green Alliance initiative was later included in the EU’s external strategy for international energy cooperation linked to the REPowerEU plan in response to the war in Ukraine (Norwegian Commission, 2022; Parliament, 2022).

However, Norway has argued that the European Commission should adopt a more flexible approach to define when hydrogen production should be considered renewable with references to the ‘additionality’ principle proposed for a delegated act under the 2019 Renewable Energy Directive (whereby renewable hydrogen should be produced by additional renewable electricity). The government held that this principle could threaten Norway’s hydrogen projects as Norway remains a net exporter of land-based renewable electricity (Montel, 2022). In June 2023, the European Commission adopted the act with the principle retained, but with the opportunity to count electricity as fully renewable if the hydrogen plant is located in a bidding zone where the average proportion of renewable electricity exceeds 90% (European Union, 2023a).Footnote 9 Norway is one of few countries that follows the 90%-rule in all its bidding zones and may thus attract attention as location of hydrogen production for Europe (Collins, 2023).

Also, other recent EU policies apparently align well with Norway’s priorities. A series of new EU policies aims at decarbonizing the shipping industry and kick-starting the uptake of renewable and low-carbon fuels. The revised EU ETS Directive requires shipping companies to buy allowances for parts of their emissions (40%) in 2025, increasing to 100% from 2027.Footnote 10 Recent agreement on the FuelEU Maritime Regulation establishes a framework for increased supply and demand of low-carbon maritime fuels based on targets set for reduction in the carbon-intensity of energy used onboard ships.Footnote 11 To promote the use of renewable fuels of non-biological origin (RFNBOs), the Council and Parliament agreed to allow a ‘multiplier’ of two to be used when calculating the GHG intensity of the energy used onboard ships.Footnote 12 The revised Alternative Fuels Infrastructure Regulation set targets for distance between electric charging and hydrogen refuelling infrastructure in road transport. However, no mandatory requirements are included for hydrogen infrastructure for the maritime sector in ports, leaving it up to the Member States’ discretion (European Union, 2023b). These EU regulatory initiatives may add some drivers, supportive of Norway’s vision of using its competitive advantage in development of alternative maritime fuels, including hydrogen and ammonia (Norwegian Government, 2021b).

Cooperation on research and innovation is seen as vital for cutting costs and making low-carbon hydrogen commercially attractive. Norwegian actors participated in several projects under the Horizon 2020 programme for hydrogen called the Fuel Cells and Hydrogen Joint Undertaking (FCH JU). In 2021, the EU launched the Clean Hydrogen Joint Undertaking (usually referred to as the Clean Hydrogen Partnership), a public–private partnership that is the successor of FCH JU and is funded by Horizon Europe. Norwegian research and technology actors participate in this partnership, which is closely aligned with the goals of the European Hydrogen Strategy and supports research and innovation activities in the production, distribution and use of hydrogen in transport, industry and buildings. Of these, hydrogen use in transport and industry are especially relevant to Norway.

Norwegian hydrogen developers are eligible to apply for funding from various EU programmes—among them, Horizon Europe (including specific funds reserved for regional Hydrogen Valleys and the Clean Hydrogen Partnership), and the Innovation Fund on low-emission technologies which has been opened for projects to decarbonize the maritime sector. Emerging from the RePowerEU Plan to accelerate the uptake of hydrogen in the EU, the Commission in 2023 established a new funding instrument based on the Innovation Fund, the European Hydrogen Bank. It aims at unlocking private investments in green hydrogen value chains (not blue hydrogen projects), both domestically and in third countries. In autumn 2023, a pilot auction (competitive bidding) will be launched to support the production of renewable hydrogen, with indicative budget of EUR 800 million (European Commission, 2023b).

EU funding programmes may be important but most of the total funding is likely to be provided by the member states. The EU has adopted specific state-aid guidelines as part of its competition policy. Under these guidelines, specific rules have been adopted for the category defined as Important Projects of Common Interest (IPCEI), which provide better opportunities for national state aid to facilitate European technological leadership, also in the field of hydrogen. State aid to IPCEI projects may cover up to 100% of costs. EU state-aid guidelines adopted in 2021 include support to both ‘green’ and ‘blue’ hydrogen; the EU taxonomy also includes sustainability criteria for investments in natural gas and the production, distribution, and storage of low-emission hydrogen. Norway has committed funds to two hydrogen projects under the IPCEI platform (see below).

Other EU policy initiatives that may affect Norway’s hydrogen strategy include the Net-Zero Industry Act, the ocean energy strategy on offshore wind power production and infrastructure in the North Sea, and the revision of the EU gas market, including markets for renewable gases, natural gas and hydrogen.

3.2 Private Sector Involvement

The private sector is increasingly engaged in the implementation of international hydrogen projects. Several major state-sponsored industrial demonstration projects indicate how the domestic hydrogen strategy includes the positioning of Norway in the emerging international hydrogen value chain, including ‘green’ and ‘blue’ hydrogen production, process industries and maritime end-users:

TiZir’s hydrogen project at the smelter in Tyssedal has received €26.1 million from Enova and has been granted status as an IPCEI project. This project, which aims to replace coal with ‘green’ hydrogen in the production of titanium dioxide, may have an international potential (Enova, 2021a).

The Barents Blue project is led by Horisont Energi in cooperation with Equinor and Vår Energi. The project has received €48.2 million from Enova and has also been granted status as an IPCEI project. Barents Blue aims to develop the world’s first ammonia plant with zero CO2 emissions and a daily production of 600 tons of hydrogen to be transformed into 3000 tons ammonia. The CO2 will be stored at the shelf outside Finnmark in northern Norway (Enova, 2021b).

Yara has received €28.3 million for constructing a ‘green’ hydrogen demonstration plant to show that ammonia produced using renewable energy can reduce emissions of CO2 in fertiliser production (Yara, 2022).Footnote 13

The 2019 the Aurora project aimed to develop a complete liquid hydrogen supply chain for commercial shipping, in cooperation with BKK, Air Liquide and Equinor, involving hydrogen produced by electrolysers. However, in March 2022 the parties decided to cancel this project. They announced that they will need to evaluate how the market for liquid hydrogen develops, and noted the need for further support schemes for hydrogen production in the form of contracts for difference to make hydrogen available at an affordable price (Eviny, 2022).

To date, the largest energy company Equinor is most active internationally—participating in at least six international hydrogen projects at various points in the innovation chain (Equinor, 2022). In 2019, Equinor partnered with the French energy company Engie to promote the production of ‘blue’ hydrogen, focusing on consumers and the public authorities in Belgium, the Netherlands and France (Equinor, 2021). In 2020, it launched a ‘blue’ hydrogen project outside Hull in the UK (H2H Saltend), also to demonstrate the potential of ‘blue’ hydrogen to the EU and Germany (BT, 2020). In 2021, Equinor started a feasibility study for producing ‘blue’ hydrogen in Norway for export through new pipelines to Europe (E24, 2021a), and in 2023, they announced plans to build hydrogen pipeline between Norway and Germany by 2030. The plan is part of a new strategic partnership with the German utility RWE for the development of large-scale value chains for clean hydrogen (Collins & Radowitz, 2023). Thus, the first part of the plan involves construction of new gas power plants in Germany. Equinor also launched a major €35 billion euro vison towards 2035 for ocean wind, ‘blue’ hydrogen and CCS, with the company pledging to cover approximately one-third of the costs (E24, 2021b). However, these ‘blue’ hydrogen plans and projects are surrounded by uncertainty and the company is not yet producing any ‘blue’ hydrogen.

Also other Norwegian companies are active internationally in hydrogen sector, such as Hydro and Yara (with roots to Norsk Hydro). Yara is engaged in several international projects: Firstly, Yara with others launched the Green H2 Catapult– a global private initiative supported by the UN Climate Change High-Level Champions initiative. They also teamed up with clean energy companies, including ENGIE, Idemitsu Kosan, Jera, Kyushu Electric Power, Trafigura and Ørsted, to produce clean ammonia (Yara, 2023). Hydro has ‘produced the world’s first successful batch of aluminium using green hydrogen fuelled production in Navarra, Spain (Hydro, 2023). Furthermore, the Norwegian Maritime Authority granted temporary approval for the use of ammonia as a fuel, for the first-ever ammonia-fuelled bulk carrier—a Norwegian ship which will be set afloat in 2025 (Norwegian Maritime Authority, 2023).

Several Norwegian companies also export hydrogen technology (e.g., NEL, HydrogenPro, HYON, Zeg Power). With roots back to Norsk Hydro’s production of ‘green’ hydrogen, NEL has developed into a global hydrogen company with leading technologies in the production, storage and distribution of hydrogen based on renewable sources. In 2017, NEL became one of the world’s largest electrolyser companies, with the largest manufacturing plant for hydrogen fuelling stations and plans for the world’s largest electrolyser manufacturing plant (NEL, 2022). In 2022, the company acquired its largest contract ever for electrolyser equipment to a US customer (DN, 2022), and in 2023, NEL signed a contract with Statkraft for the delivery of 40 MW electrolysers for production of green hydrogen in Norway (Statkraft, 2023). The current estimate for the cost of green hydrogen production in Norway is €5.20 per kg hydrogen, of which the cost for power and grid is about 60% (Enova, 2023b).

3.3 International Policy Dimensions

Norway does not have a distinct, unified foreign policy on hydrogen. The Ministry of Energy plays a key role in coordinating Norway’s international engagement. However, several sector ministries are involved in various aspects of the hydrogen chain: The Ministry of Climate and Environment ‘owns’ the state fund for transition (Enova), with main responsibility for the IPCEI projects; the Ministry of Trade, Industry and Fisheries has responsibility for fuels, industrial value creation and ‘green’ shipping; the Ministry of Transport is in charge of fuelling stations and ferry boats; and the Ministry of Education and Research is responsible for research and innovation. This administrative fragmentation may pose coordination challenges.

In addition, the Ministry of Energy, with Enova and Innovation Norway, is part of the European Clean Hydrogen Alliance for developing hydrogen value chains in the EU. This alliance keeps track of potential hydrogen investment projects.

With some 40 years of energy cooperation, Germany is a main bilateral partner on hydrogen, and indeed the only country that works with Norway on specific hydrogen projects. According to a joint Norwegian–German statement from January 2022 on enhancing the dialogue on energy and industrial transformation, Norway wants to ‘contribute actively to the rapid development of the hydrogen market in Germany and the EU’, and Germany would like to see ‘Norway become a future partner for the production and supply of hydrogen’ (Norwegian Government, 2022f p.1). This includes a joint plan for the use of ‘blue’ hydrogen for a transition period, to ‘ensure environmental and climate integrity by establishing for example the highest possible standards for Carbon Capture and Storage’—indicating that CCS-sceptical Germany accepts ‘blue’ hydrogen.

In June 2022, Norway signed an agreement with several industrial actors in Northern Germany which is set to run until 2025. This industrial partnership includes offshore wind, hydrogen and CCS, and aims at developing new projects and funding in these areas (Norwegian Government, 2022d). Germany also represents a potential market for exporting Norwegian maritime hydrogen technology. Through Innovation Norway’s High Potential Opportunities programme for major export initiatives, Norway focuses on exporting hydrogen technology to northern Germany for the development of hydrogen value chains in the maritime sector (Innovasjon Norge, 2022). In January 2023, cooperation between Norway and Germany took a new step forward. During a meeting between German Vice-Chancellor Robert Habeck and Norwegian Prime Minster Jonas Gahr Støre, Equinor and RWE announced joint plans that included the production of hydrogen and infrastructure for export to Germany. Nel also announced agreements with Statkraft and the German HH2E on production of electrolysers and hydrogen production facilities.

Also important are France, Belgium, the UK and the Nordic countries. Norway has close contact with France on information sharing and innovation: The Global Growth Hydrogen programme with France focuses on private actors and ‘green’ hydrogen, which is also part of Innovation Norway’s new export strategy (Innovasjon Norge, 2023). Norway’s MoU on energy with Belgium includes knowledge sharing on hydrogen. There is also regular bilateral contact with the UK and established cooperation with Sweden and Denmark, particularly on ‘green’ hydrogen and infrastructure (Hydrogen24, 2022). This is underpinned by the Nordic Council of Ministers’ Nordic Energy Research, which has facilitated several hydrogen-related initiatives. Moreover, the Nordic climate and environment ministers have agreed that their countries will work together to establish green corridors for emissions-free shipping between ports in the region (Nordic Co-operation, 2022).

Beyond Europe, Norway participates in several ministerial meeting platforms in North America and Japan, including the Japan-led Energy Ministerial Meetings, where hydrogen frontrunners discuss hydrogen solutions to facilitate a commercial breakthrough, share information and develop standards and regulations. These are followed up in other arenas where Norway is involved, such as Mission Innovation (MI) linked to the Paris Agreement and the International Partnership for the Hydrogen Economy, which is involved in setting standards for hydrogen. Norway also participates in the IEA technology network and has joined the Clean Hydrogen Mission led by Australia, Chile, the EU, the UK and the USA, and the Zero-Emission Shipping Mission led by Norway, Denmark and the USA. The aim of the Clean Hydrogen Mission is for 5% of the global deep-sea fleet to be emissions-free by 2030.

3.4 International Markets, Financing, Capacity Development and Challenges

The European market is, as noted, central to Norway’s ‘blue’ hydrogen export ambitions. Spurred by the war in Ukraine, the REPowerEU plan aims at rapidly reducing the EU’s dependence on Russian fossil fuels (mainly gas) and accelerating the green transition, thereby significantly raising the EU’s hydrogen ambitions (European Commission, 2022; Skjærseth, 2023). The previous goal of 10 million tons of annual hydrogen production within the EU is to be complemented by 10 million tons of annual imports by 2030, in order to meet the EU’s climate target. According to European hydrogen industry estimates, there will be a need for ca. 120 GW electrolysis capacity in the EU to meet the 10 million ton domestic hydrogen production target. This is a significantly higher amount than the 40 GW originally envisaged in the 2020 European Hydrogen Strategy (Ansari et al., 2022).

These EU import ambitions generally align with Norway’s ‘blue’ hydrogen export ambitions, but whether Norway will be able to produce and export significant amounts of low-carbon hydrogen to Europe by 2030 remains uncertain. Norway and Germany have initiated a feasibility study on large-scale transportation of hydrogen, mainly via pipelines from Norway to Germany (Norwegian Government, 2022a). Gassco—the Norwegian system operator for the gas pipelines between Norway and Europe—has assessed alternative use of the pipelines, and technical barriers to using them for hydrogen transport. However, capacity will probably not be available before 2030. Mixed transport of natural gas and hydrogen through pipelines is also being considered. Other options include LNG and natural gas export in the form of ‘blue’ ammonia.

Investments and capacity building beyond Europe have lower priority. However, in August 2022, the Norwegian Agency for Development Cooperation (Norad) for the first time allocated some support to hydrogen projects in Africa. Through the company Scatec, €8.5 million was allocated to production of ‘green’ ammonia in Egypt, Morocco, South Africa and Tunisia. The funding was partly motivated by climate concerns in Africa, and by the need to support hydrogen production to replace Russian gas export to Europe—in line with the REPowerEU plan (Norad, 2022). Moreover, the Norwegian state-owned renewable fund ‘Nysnø’, together with Equinor and Yara, has invested in the hydrogen fund AP ventures (DN, 2021).

The main external challenge to Norway’s export ambitions is developing a commercial market for low-carbon hydrogen in Europe. Despite more ambitious EU targets, major challenges that have been identified include demand for electricity and lack of production capacity for electrolysers (Ansari et al., 2022). Regarding competitiveness of ‘blue’ hydrogen, Norway as a gas producer may not enjoy competitive advantages as gas market prices is expected to develop similarly in Norway and other parts of the European gas market (Norwegian Government, 2021a:116).

A commercial hydrogen marked may prove controversial also from a sustainability perspective. Ongoing research examines its potential impact on the atmosphere including the ozone layer (Forskning.no, 2021). The sustainability of ‘blue’ hydrogen specifically is also heavily debated (see NRK, 2021). From a life-cycle perspective, it has been held that ‘blue’ hydrogen will not be low-carbon unless the release of fugitive methane in the production process is dealt with (Howarth & Jacobsen, 2021). In the EU, carbon capture and storage has a long and politically contentious history, also with regard to the issue of whether captured CO2 can be stored indefinitely. CO2 storage also requires large amounts of electricity (Espegren et al., 2021).

4 Conclusions

Norway’s hydrogen strategy has potential significance for Europe, given its focus on low-carbon hydrogen technologies for industry and maritime end-users, development of electrolysers, and production of ‘blue’ hydrogen for export to the continent. These points concern most EU member states with low-carbon hydrogen ambitions, particularly those with maritime interests, high hydrogen import needs and gas pipelines to Norway, such as Germany. The external dimension of Norway’s hydrogen strategy largely mirrors the internal dimensions—international industry initiatives and policy agreements focus on establishing infrastructure and a European market for exports of blue hydrogen produced in Norway. Norway’s technology-neutral approach to ‘green’ and ‘blue’ hydrogen linked to emissions deviates from the EU and most other European countries. However, the Norway-EU Green Alliance and recent changes in Germany’s hydrogen strategy indicate higher acceptance for imports of ‘blue’ hydrogen as a transitional technology (Reuters, 2023).

However, there remain several challenges for realizing the Norwegian hydrogen strategy. Regular domestic or international commercial markets for low-carbon hydrogen have not yet emerged. Uncertainties regarding the competitiveness of low-carbon hydrogen, technologies and costs, infra-structure, markets, transport and safety permeate Norway’s hydrogen strategy. Key internal challenges include growing demands for high-priced, increasingly scarce renewable electricity, and trade-offs with land use, such as nature protection. Other challenges include technical barriers, sustainability issues, uncertain commercial prospects and the short-to-medium term perspective of ‘blue’ hydrogen as a transitional technology versus Norway’s long-term export strategy.

Regulatory frameworks, markets and technology for blue and green hydrogen in Europe are still under development. Thus, it is too early to conclude exactly what Norway’s hydrogen strategy will mean for Europe, and whether European policies and markets will be supportive of Norway’s main priorities: export of ‘blue’ hydrogen with ‘green’ hydrogen primarily covering domestic needs, and technology development to enable hydrogen use in maritime and industrial sectors.