Norway’s ambitions to become a key supplier of low-carbon hydrogen to Europe have suffered a setback, with plans to develop a pipeline to Germany put on hold because of a lack of demand.

Norwegian state-owned energy firm Equinor and oil major Shell have both withdrawn from a project—led by Norwegian state-owned gas network operator Gassco—to study the viability of a pipeline to take blue hydrogen produced in Norway to Germany.

Both firms have blamed a lack of demand for their withdrawals, which have also triggered the cancellation of upstream blue hydrogen production projects in Norway.

“We do not see enough market pull for Blue H2” Shell

“We can confirm that we, at this time, do not see enough market pull for Blue H2 to sustain financial support to the Gassco-led study of a H2 pipeline Norway–Germany,” a spokesperson for Shell told Hydrogen Economist.

As part of its retrenchment in Norway, Shell has also paused a joint project with developers Aker Horizons and CapeOmega to produce blue hydrogen within a complex sited near its Nyhamna gas processing plant. The project, called Aukra, was designed to produce 1,200t/d of blue hydrogen by 2030 and would potentially have been connected to the pipeline.

“We have also chosen to put the Aukra project on hold for the same reasons. This partnership was not renewed when it expired in June this year. We do not currently have other active H2 projects in Norway,” the spokesperson added.

Equinor’s withdrawal from the pipeline project also appears to have triggered a retreat from blue hydrogen production by the state-owned firm at home. Equinor has previously set out ambitions to develop 2GW of blue hydrogen production in Norway by 2030, rising to 10GW by 2038.

"The hydrogen pipeline has not proved to be viable. That also implies that hydrogen production plans are also put aside," an Equinor spokesperson said. "We are not able to make this kind of investments when we do not have long-term agreements and the markets in place."  

Low-carbon definition

A lack of clear definition of low-carbon is hampering blue hydrogen demand in the EU, said Emma Woodward, European hydrogen market lead at Oxford-based Aurora Energy Research.

"At present EU regulations regarding what can be counted as low-carbon hydrogen have not yet been defined, and these are not expected until 2025,” she said. “Until we have this certainty, there is no incentive for offtakers to commit to using blue hydrogen as is it unclear whether the hydrogen produced under agreements they sign will meet these criteria."

Equinor had lined up a potential offtaker in the form of German energy firm RWE. The two companies signed a memorandum of understanding (MOU) in early 2023 aimed at

working together on the development of low-carbon hydrogen supply for use in Germany’s power generation sector from 2030.

1,200t/d – Shell’s potential production

The MOU called for collaboration on blue and green hydrogen production projects as well as joint investments in hydrogen-ready gas-fired power plants in Germany. However, the plan was contingent on the development of the pipeline.

The collaboration had the potential to develop Norway into a key supplier of hydrogen to Germany and Europe, Equinor CEO Anders Opedal said at the signing of the MOU. The agreement came as Germany stepped up its efforts to build a diverse portfolio of hydrogen suppliers.

German power

Despite the Norway pipeline setback, RWE said it is continuing to prepare to possibly participate in German government auctions for hydrogen-ready gas-fired power generation.

“The H2-ready gas-fired power plants that RWE wants to build in Germany still require a political framework from the German government. The power plants could then go into operation from 2030 at the earliest,” a spokesperson told Hydrogen Economist.

“It remains to be seen which type of hydrogen (blue or green) from which countries will later be used to supply the hydrogen core network, which is also yet to be established throughout Germany.”

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Author: Stuart Penson