Norway needs a strategy for international hydrogen investment
DEBATE: Norway should use the opportunity and invest heavily in green hydrogen going forward.
Debate post
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Terje Pilskog
Managing Director Scatec
Europe and the world are experiencing an energy crisis. Russia’s aggression in Ukraine has dramatically changed the energy supply in Europe. The rest of the world is also affected by the instability in Europe in addition to rising prices for energy inputs. On 6 July, the EU Parliament also voted in favor of the proposal for a new taxonomy from the European Commission.
For Norway as an energy nation, this presents both challenges, but also new opportunities. We have broad expertise in energy production and, by playing our cards right, we can position ourselves for the new energy future that is taking shape now. In order to succeed in capturing these opportunities and further developing Norway as a leading energy nation, we depend on interaction between the authorities and business.
We need green hydrogen
For example, investing in green hydrogen will be necessary to reduce emissions in everything from shipping to fertilizer and industrial production. This is a global development where we see that large countries and companies throughout the world have clear strategies to take part in this market. High costs have prevented the development of green hydrogen so far. About 80% of the cost of green hydrogen is power, and green hydrogen production will therefore over time be concentrated where you have access to the cheapest renewable power.
Energy Norway embraces a broad approach and already has a strong starting point in green hydrogen. We have expertise in both hydrogen production and renewable energy, we are used to working internationally in the energy sector, we have extensive experience with shipping and transport of energy. Not least, we have a significant investment capacity.
Norway must put in place a green hydrogen strategy for how the country can play in the international value chain with production and expertise where renewable energy is the cheapest. This is today in the Middle East and the Mediterranean region with very good sun and wind conditions. Several Norwegian players are already active in the region, and Scatec is planning several large green hydrogen projects. We are ready to use all available Norwegian expertise in the implementation of huge energy projects.
We have good tools
Scatec would not have been where we are today without support from the Norwegian policy apparatus. Norad, Eksfin and Norfund have helped to reduce the risk and trigger several of Scatec’s significant renewable investments in emerging markets. The Norwegian support mechanisms continue to play a central role in the development of green hydrogen projects in Egypt and Oman. But we need political leadership and a holistic strategy. Beyond support mechanisms, we need to create incentives and support to accelerate development.
The EU has an ongoing process to define important regulatory requirements related to green hydrogen and how to become more energy dependent. We have to have two thoughts in our heads at once. Norway should seek involvement in alternatives and the future, other among the green hydrogen revolution that is on the way in Europe. The time to act is now.
As a response to the war in Ukraine, the EU Commission has launched RepowerEU. In the original plan from the EU, the import and production of green hydrogen was to be 5.6 million tonnes by 2030. After the invasion of Ukraine and the launch of RepowerEU, the ambition has increased to 20 million tonnes, of which 10 million tonnes will be imported. Where will all this come from?
We have to import hydrogen
Europe and Norway will account for a share of this production, but this will not be enough. The EU has therefore established a concept of five corridors that will deliver to Europe. It is natural that it comes from nearby areas that can develop renewable energy and green hydrogen on a large scale and at low cost. Two things are fundamental for Norway and Norwegian companies to succeed in this energy future. Firstly, we must help influence the EU’s international strategies for green hydrogen imports, and ensure that Norwegian companies are positioned to achieve these ambitions.
Secondly, Norway must align the authorities’ various instruments and support in order to make the best use of future opportunities for Norwegian business. In this way, we can contribute to achieving global climate goals and further develop our position as an energy nation. Germany works actively to position German companies. If Norway is to succeed, we must look to similar initiators. Norway has unique tools with an instrument apparatus, support mechanisms for renewable energy and the newly started climate fund. Now we need a clear international hydrogen strategy for Norway that can contribute to achieving the climate goals and further develop the energy nation for future generations.