Norway's New Industrial Policy Moves Away from Hydrogen Energy

March 29, 2025 – Michael Barnard

Norway, once seen as a potential leader in hydrogen energy, is revamping its industrial strategy and distancing itself from hydrogen as a primary energy source. The shift marks a significant change from the enthusiasm that characterized Norway's initial foray into hydrogen during the early 2020s.

A Bold Start

In 2020, Norway initiated a national hydrogen strategy, imagining a future where both blue and green hydrogen would be key players in decarbonizing various sectors, including shipping and manufacturing. By 2021, the government had committed to a hydrogen roadmap that aimed to develop domestic markets and position Norway as a significant supplier in Europe. Investments close to NOK 1 billion (around $100 million USD) were allocated for hydrogen pilot projects and infrastructure.

However, the optimism surrounding hydrogen faced challenges. The economics and physics of hydrogen production as an energy source proved to be more daunting than initially anticipated.

The Reality of Hydrogen Economics

Hydrogen is known for being an inefficient energy vector. For instance, the process of generating green hydrogen consumes a considerable amount of clean electricity, resulting in energy losses during production and usage. Blue hydrogen, while slightly more efficient, still relies on substantial infrastructure and suffers from inherent challenges such as methane leakage and the limitations of carbon capture technology.

Despite Norway's strong reputation for its low-emission natural gas extraction, the market dynamics for hydrogen have shifted drastically.

Market Demand Declines

Fast forward to 2024, and the narrative of hydrogen has notably changed. Norway’s latest industrial policy, Meld. St. 16, indicates a reduced emphasis on hydrogen as an energy solution. While some maritime fuel projects, like ammonia, have received modest support from the government, the broader hydrogen initiatives have been sidelined due to poor market conditions and economic viability.

The policy reflects concerns about immature markets, high costs, and logistical barriers, signaling a stark contrast to the ambitions of previous years. The grand visions of hydrogen hubs and exports have faded in the face of dwindling demand and economic rationale.

Infrastructure and Project Failures

Several high-profile hydrogen projects have faltered, with notable examples including the Aukra blue hydrogen facility, which was abandoned after failing to secure buyers. Similarly, the Hellesylt Hydrogen Hub, envisioned as a comprehensive ecosystem fueled by hydropower, lost momentum due to a lack of agreements and meaningful progress.

Moreover, the workforce and financing behind these projects have also come under scrutiny. Reports suggest that approximately half of Norway's hydrogen workforce consists of consultants, raising questions about sustainability in an industry that may no longer be viable.

Shipping Projects Underperform

A closer examination of Norway's hydrogen initiatives in the maritime sector reveals a troubling trend. The MF Hydra, launched as the world's first liquid hydrogen-powered ferry, faced numerous operational challenges. Its emissions were found to be significantly higher than those of traditional diesel ferries, due to the energy-intensive transportation of hydrogen across long distances.

In light of these developments, many experts believe that Norway's focus should shift towards more practical and efficient solutions. Battery-electric ferries, which are proving superior in terms of cost and emissions, are taking precedence over hydrogen-based technologies.

A Shift in Corporate Strategy

In late 2024, Equinor, Norway's leading energy company, reversed its plans to develop the world’s first offshore hydrogen pipeline to Germany, primarily due to a lack of interest in hydrogen exports. The company has since reduced its investments in clean energy and adjusted its emissions targets, indicating a shift in focus away from hydrogen.

Conclusion: A Quiet Shift Away from Hydrogen

Norway's strategic pivot away from hydrogen is a silent acknowledgment of the limitations of this energy source. While hydrogen technology remains under consideration for specific applications, it no longer occupies a pivotal role in Norway's energy future. The government continues to funnel funds into research and development but has recalibrated its expectations.

As the hydrogen narrative evolves in Norway, it reflects a broader understanding that the future of energy may lie not in revolutionary technologies but in practical and economically sound solutions. The focus is now on aligning energy strategies with realistic market demands and technological efficiencies.