Norway poised to lead green hydrogen market

Despite impressive recent gains with and battery technology and renewables such as wind and solar power, these alone cannot reduce the greenhouse gas emissions from energy-intensive industry and transport.

Green, or renewable, hydrogen is widely considered the most viable, economical and environmentally sound solution that can bring the emissions of hard to abate sectors down to net zero. Now many companies and countries are vying for top positions.

Clean energy critical to realising green hydrogen’s potential

While the market is immature, the winners will be those with an existing competitive advantage and the capacity to produce green hydrogen.

“Electricity is the most important cost factor in renewable hydrogen production,” explains Ingebjørg Telnes Wilhelmsen, Secretary General of the Norwegian Hydrogen Forum. That’s why Wilhelmsen believes that a burgeoning hydrogen industry can quickly build upon Norway’s strongest asset: its existing renewable energy capacity.

At the outset of the 20th century, Norway set about building a hydropower industry that would provide generations of Norwegians with more clean energy than they could themselves consume. So much, in fact, that Norway has long been among the top 20 electricity exporters worldwide, exporting on average between 10–15 TWh to European markets annually.

Norway is already a European energy superpower, with abundant, clean electricity to spare.

Innovative hydrogen companies and supplier ecosystems

Norway has several internationally recognised companies that have already capitalised on this advantage to become leaders in the field.

Nel, for example, is the world’s largest manufacturer of electrolysers. Hexagon Purus and Umoe Advanced Composites are leading suppliers of composite tanks, storage containers and transport solutions for hydrogen. Statkraft, Europe’s largest producer of renewable energy, has also heavily invested in hydrogen.

Behind Norway’s energy also lies a powerful supplier industry that produces a wide spectrum of technologies and services for the global market.

Of course, Norway’s position as an energy leader is also due to its oil and gas sector. But Wilhelmsen believes this should not get in the way of the energy transition.

“In part, much of our energy expertise is the result of many years of working with oil and gas extraction,” she concedes, before continuing:

“I completely understand that some only think ‘fossil fuel’ dinosaur when they hear Norway. But haven’t we all been? And now, just like many other countries, we are pushing hard for change,” she says.

Furthermore, Wilhelmsen sees the expertise in energy systems and related infrastructure provided by oil and gas as advantageous now as the country makes the transition to zero-emission energy solutions.

Hydrogen needs effective policy and early adopters to lead the way

Among the hydrogen optimists is Knut Linnerud, Cluster Manager for Arena H2 Cluster. Linnerud appreciates the scale of the challenge at hand, but points to Norway’s previous energy transformations as grounds for his confidence:

Both Wilhelmsen and Linnerud acknowledge that reaching the goal of zero-emission energy in Norway – and achieving the targets of the Paris Agreement – will require effective policy.

Here too Norway excels. It currently ranks number one on the Human Development Index, for example, and number nine on the Environmental Performance Index (UK 4th place, France 5th, Germany 10th). Getting there takes effective governance that can see policy through.

Today, Norway’s government has a broad mandate from both the opposition and ruling parties to push forward the green transition, and already has Norway topping another list that most countries have only just begun to climb. As a result of policy incentives, the EV market share of total new car sales has reached nearly 55 per cent as of April 2021.

Hydrogen strategy takes on heavy CO₂ emitters

Through effective policies like these, many of the low-hanging fruits have already been picked in Norway. But emboldened by the success of electrifying a sizeable segment of its cars, buses, and trains, in July 2020 the Norwegian government presented a hydrogen strategy that takes aim at hard to abate sector emissions.

“Norway is a lengthy country, and especially heavy-duty transport and marine vessels require long range, short filling time and large cargo space,” explains Wilhelmsen, who continues:

“In creating a domestic market for development and delivery of hydrogen technology and services, we can thereby pave the way for export. We already have companies that are global leaders in this field.”

Norway’s largest grocery wholesaler ASKO, for example, launched its first fleet of hydrogen trucks in 2020. And in 2021, Norled will commission the world’s first car ferry powered by liquid hydrogen in Rogaland county in Southern Norway, with several more routes under development.

“As electric cars have demonstrated, Norway is known for being an early adopter of new, zero and low emissions technologies. I strongly believe we’ll see the same with hydrogen,” says Wilhelmsen.

Incentivising green hydrogen expansion with carrot and stick

Hydrogen currently accounts for less than 2 per cent of Europe’s present energy consumption, but projections have it playing a much more important role soon. The EU’s new hydrogen strategy, for example, includes the target of having hydrogen account for 13 to 14 per cent of the European energy mix by 2050 as well as a EUR 400 billion investment pipeline known as the European Clean Hydrogen Alliance.

Such incentives are essential to creating demand that will in turn stimulate greater innovations, which will in turn drive down the costs. But as long as fossil fuels remain the cheaper option, green hydrogen will continue to face an uphill battle.

“Choosing zero emissions needs to pay off,” points out Wilhelmsen, who suggests both Norway’s and the EU’s plans to incrementally increase the price on CO₂ will ultimately have this effect.

Thus, with the conjunction of these three trends – unprecedented funding, lower-cost innovations, and higher-cost carbon – many are saying hydrogen’s time has come:

“In the short term, many often see it as financially sensible to not rock the boat. But right now, the world is undergoing a dramatic transformation, and those nations and companies that are most adaptable will be the ones with the lowest long-term risk. In other words, not taking an offensive position in the energy transformation equates with higher risk,” says Linnerud, who is confident Norway is already well positioned to lead the way:

“Norway has unique advantages with respect to its resources, in terms of energy, capital and expertise, that has allowed it to take a world-leading role in tomorrow’s energy systems.”