Bubble Burst: Why Norway’s Blue Hydrogen Fantasy is Over Before It Started

For the first time, this comprehensive briefing brings together evidence to demonstrate that Norway’s plans for blue hydrogen are unrealistic and economically unsound. This analysis synthesizes data from multiple sources, including market projections, policy trends, and technological assessments, to provide a clear picture of the insurmountable challenges facing Norway’s blue hydrogen strategy.

Norway, a major gas producer, is promoting blue hydrogen (produced from fossil gas with carbon capture and storage) as a way to meet European hydrogen demand and maintain its gas industry. This strategy is supported across Norway’s political spectrum but faces increasing scrutiny. Blue hydrogen is meant to justify continued gas exploration, including in Arctic regions. However, this strategy is based on unrealistic expectations and conflicts with European climate goals and market trends.

The cancellation of both Equinor’s and Shell’s/Aker’s proposed blue hydrogen projects in Norway, and a planned hydrogen pipeline to Germany, in September, citing the lack of a market, burst the blue hydrogen bubble. The projects do not have a future because blue hydrogen is too expensive and dirty for Europe’s needs. Norway’s blue hydrogen plans are nothing more than wishful thinking, a fantasy based on false claims designed to excuse a push for more fossil fuel exploration.

Key Takeaways

1. Norway’s blue hydrogen strategy is economically and environmentally unsound. Equinor and Shell have canceled their projects because there is no market for blue hydrogen, and no other blue hydrogen projects in Norway are currently operational or have reached a final investment decision.
2. The theoretical window for blue hydrogen to be a transition to green hydrogen is closing quicker than most blue hydrogen projects can be realised under pressure from both policy and market forces because locally sourced green hydrogen is cleaner and increasingly affordable.
3. European hydrogen targets have been criticised by the IEA and other independent observers for being exaggerated, as electrification with renewables is a cheaper and more efficient path to decarbonization for the vast majority of use cases.
4. Norway’s gas industry and enabling politicians are trying to justify a push into new gas fields in Arctic waters. This puts Norway in conflict with EU policy, and our analysis shows that even optimistic ambitions for blue hydrogen would not justify opening new gas fields.
5. Carbon capture, the key component of blue hydrogen, has a 50-year record of failure, has never achieved capture rates that would make blue hydrogen live up to its claims of being ‘low-emission,’ and remains expensive and unproven at scale.

Recommendations

It is time for Norway to stop dreaming of blue hydrogen as a lifeline to its declining gas industry and instead plan now for the inevitable just transition away from fossil fuels.

Norway should:

• Abandon all plans for blue hydrogen exports to Europe;
• Stop oil and gas exploration and not approve any new oil and gas fields;
• Make a detailed plan for a just transition away from oil and gas that protects workers while creating new jobs in sustainable industries and
• Stop lobbying Germany and Europe on blue hydrogen.