Hydrogen law, regulations & strategy in Norway

The development of a Norwegian hydrogen value chain by 2030 is one of the Norwegian Government’s focus areas and part of Norway’s target to become a low-emission society by 2050. Norway’s ample access to both renewable energy sources and natural gas provides an advantage in the global race to develop hydrogen solutions. Norwegian knowledge and technology communities, well-positioned for the development of a hydrogen value chain, give an additional competitive edge.

Norway currently produces approximately 225,000 tonnes of so-called grey hydrogen per year, derived from natural gas without utilising carbon capture technology. 1  The cost of producing grey hydrogen is a third of the cost of producing green hydrogen, but the production method entails high emissions of CO2. Despite the number of initiated projects, only a small amount of emission-free hydrogen is currently being produced in Norway. 2

As of June 2024, Norway had a total of 212 hydrogen projects (in planning or development), spanning production, consumption, research and development and technology. Out of the 212 projects, 75 are related to the production of hydrogen (mainly electrolytic). 3  Several exciting pilot projects started production in 2024. One of them is Yara International’s 24 MW renewable hydrogen plant at Herøya, which opened on June 10, 2024. It produces hydrogen for the production of fertilisers through the electrolysis of water and renewable energy. 4  Another pilot project, which officially opened on September 18 2024, 5  is the Hellesylt Hydrogen Hub by Norwegian Hydrogen, with its production of green hydrogen through electrolysis powered by local hydropower plants. 6  The plant has a daily production capacity of up to 1.3 tonnes and aims to provide hydrogen to marine vessels.

Increased costs due to increased power prices, weak exchange rates, high inflation, and the cumbersome process for connection to the electricity grid pose a challenge for the realisation of several hydrogen projects. 7  The industry also highlights the need for sufficient support schemes. 8  Despite such challenges, the hydrogen industry generally considers the development of the hydrogen value chain in Norway achievable, provided that sufficient and predictable support schemes and regulatory clarity are in place. 9

Norway, like several other jurisdictions, does not have a well-defined legal and regulatory framework for hydrogen projects. There is no complete framework that covers the hydrogen value chain, and navigating the regulatory landscape can be challenging. Furthermore, the implementation of relevant EU directives, such as the Renewable Energy Directive (RED II) of 2018, as part of the EEA Agreement, is currently subject to debate within the Norwegian Government. 10

As such, there have been no major policy changes affecting hydrogen projects in Norway during the last year. Increased and improved state support schemes have been on the agenda, especially within the maritime transport industry. Increased funding has been made possible, i.e., due to changes in the Norwegian state aid regulations that came into force at the end of 2023, 11  as detailed further below.

Policy changes that have taken place in the last year mainly relate to overarching objectives. In 2023, Norway strengthened its international cooperation on hydrogen with Germany and the UK. Norway and Germany agreed on a common goal to reach a large-scale supply of hydrogen from Norway to Germany by 2030. 12

The Norwegian State supports hydrogen projects in the early phase through various support schemes and publicly owned entities. One such entity is Enova, which is owned by the Ministry of Climate and Environment and provides various supports to environmentally friendly energy consumption and production. Another one is Innovation Norway, owned by the Norwegian State and the county municipalities.

Although various support schemes are available for hydrogen projects, several projects are not profitable despite financial support, due to factors such as increased power prices, weakening exchange rates and high inflation. 13  For this reason, Enova has recently introduced increased and improved support schemes with the intention of enabling the realisation of more hydrogen projects, and thus the establishment of the first functioning value chains for hydrogen in Norway.

The transition of the maritime sector is one of Enova’s priority initiatives. Lately, two new support schemes specifically for hydrogen projects have been introduced by Enova: “Hydrogen in Vessels” and “Hydrogen for Maritime Transport 2027”. Due to changes in the state aid regulations which came into force in Norway at the end of 2023, Enova has been able to double the support rate under these schemes from the previous rate of 40 per cent. 14

Projects that will utilise hydrogen as a fuel in vessels may therefore receive up to 80 per cent of the additional investment costs for technology enabling the operation of new or existing vessels without CO2 emissions under the “Hydrogen in Vessels” scheme. In 2024, nine vessels were granted support amounting to 1.2 billion NOK through “Hydrogen in Vessels” and its sister scheme “Ammonia in Vessels”. 15

“Hydrogen for Maritime Transport 2027” is an ongoing competition for investment support for projects that will produce hydrogen from electric power to be used as fuel by the maritime sector in Norway. 16  The winning project(s) may receive up to 80 per cent of the costs of establishing facilities and infrastructure for such production and sale. The deadline for applications under this scheme was 5 September 2024.

Enova has also improved the conditions of the scheme “Industry 2050”, which targets point emissions within industrial sectors by supporting projects aiming to develop or invest in technology that enables significantly lower emissions than existing solutions. Previously, the support scheme only supported the use of hydrogen for industrial purposes, such as thermal energy or as an input factor in an industrial process. Today, the support scheme also includes hydrogen production in the industrial sector. 17

Innovation Norway has also recently launched a scheme that can provide support for hydrogen projects: “Green Industry Financing”. The goal is to contribute to the industry’s need for risk capital by providing loans to finance investments, innovation, growth and digitalisation as part of the green shift. The scheme is aimed at large green industrial projects in Norway, and has a total budget of 5 billion NOK. 18

On a state level, Norway contributes to the funding of the EU Hydrogen Bank through its participation in the EU Emission Trading System. The Norwegian company Skiga was one of seven companies that were granted financial support through the EU Hydrogen Bank’s first auction for funding for renewable hydrogen projects in 2024. 19

In Norway, much attention has been aimed at the use of hydrogen within the maritime transport sector. With its long coastline, Norway has a large shipping industry that needs to reduce its emissions if Norway is to reach its climate goals. Hydrogen is a well-suited energy carrier for long-distance transport due to its high energy density per unit weight. As mentioned above, new support schemes have been introduced to facilitate the establishment of the first functioning value chains for hydrogen. Such schemes support both the production of hydrogen and the establishment of a demand for hydrogen fuel within the maritime transport sector.

Currently, there is only one hydrogen-powered vessel operating in Norway. This is Norled’s shuttle ferry “MF Hydra”, a pilot project based on the world’s first ship sailing on liquid hydrogen. 20 The hydrogen used by the “MF Hydra” is currently transported from Germany. This pilot project thus illustrates the importance of establishing all elements of the hydrogen value chain in parallel for the green maritime transition to be successful, as one cannot function without the others.

“MF Hydra” also demonstrates that the development of hydrogen-powered vessels is possible when a market exists, e.g., because authorities include requirements for hydrogen fuel when procuring new ferries. Another example is Torghatten Nord’s project to build two hydrogen ferries to be put into operation on Norway’s longest ferry route between Bodø and Lofoten in 2026. In this procurement, the authorities required that a minimum of 85 per cent of the energy consumption of the ferries was to be obtained from hydrogen. 21   21

One objective of the Norwegian Government’s hydrogen strategy is to facilitate the establishment of commercial production of so-called blue hydrogen. 22 Norway has large gas reserves on the Norwegian continental shelf which may be utilised for such production when coupled with technology for carbon capture and/or utilisation (CCS/U). As part of establishing commercial production of blue hydrogen, the Norwegian Government will facilitate CO2 storage on the Norwegian continental shelf. The first exploitation licence for carbon capture and storage was awarded in 2019, resulting in the development of the prestigious full-scale CCS demonstration project ‘Longship’. 23  In 2024, four exploitation licences were awarded. 24

Norway has the potential to develop into a key supplier of blue hydrogen to Germany and Europe. This potential is supported by the 2023 expansion and strengthening of Norway and Germany’s joint intention to establish a large-scale supply chain for both hydrogen and the necessary infrastructure by 2030. The collaboration includes a strategic cooperation to assess infrastructure solutions, such as a pipeline structure to transport blue hydrogen from Norway to Germany. 25  However, the Norwegian company Equinor recently announced that it has abandoned its plans to export blue hydrogen to Germany due to the combination of required cost and existing demand. This plan was part of the collaboration between Equinor and the German company RWE to reduce greenhouse gas emissions by building a hydrogen supply chain between Norwegian oil and gas fields and German power plants. 26  Then Shell announced that they are also terminating their plans to export blue hydrogen from Norway to Germany. 27  Shortly thereafter, Gassco, the state-owned operator of the integrated Norwegian gas transport system, confirmed that they are also cancelling their hydrogen pipeline project, which was intended to contribute to the establishment of a hydrogen supply chain between Norway and Germany. 28

Nevertheless, there are still exciting blue hydrogen projects on the Norwegian horizon. One example is CCB Energy Park in Øygarden. This plant officially opened in October 2023 29  and is currently undergoing commissioning. It will produce approximately 1 tonne of clean hydrogen per day (H1) when fully operative 30 , producing blue hydrogen from natural gas and storing the carbon dioxide at the same location. The project is the world’s first production plant for clean hydrogen with integrated carbon capture. 31