The Nordic Path to Net Zero

Chris Goggin reviews the measures undertaken by Norway, despite the military actions in Ukraine, to decarbonize national fuel supplies as well as the potential effect on future UK energy options.

Despite major western economies facing immediate energy problems due to Russia’s invasion of Ukraine, Norway cannot be considered to be amongst them. Norway has its own supply of gas and oil and attracts large annual revenues through exportation as a result.

Norway could potentially play an increased role in European energy distribution now Russian military aggression spreads throughout Ukrainian cities. Russian oil and gas use will be reduced by European countries as efforts will be hastened to transition towards cleaner fuels accessed through a secure supply.

Not only can Norwegian oil and gas exports increase throughout Europe due to the Ukraine crises but Norway can gain a leading position in a future hydrogen economy as multiple economies separate themselves from Russia.

Work has already begun on limiting Russian influence in the European energy market. A 215 million euro EU funded “Baltic Pipe” is being laid between Norway and Poland which is soon to be in operational use.

This cross-country gas pipe will facilitate Danish gas supplies from Warsaw as well provide the Polish government with a secure source of energy that has not travelled from Russia. This arrangement ensures elevated levels of Norwegian gas exports that will benefit the national purse. Europe will now seek to advance methods of cultivating alternative carbon neutral energy sources to limit Russia’s impact on regional fuel supplies. Hydrogen can potentially accelerate this process.

Nordic countries carry a reputation for methodical problem solving and clear logic. It is worth paying attention to how this part of the world approaches decarbonisation. UK end users should be aware that a move by a block population such as Scandinavia towards hydrogen could be yet another sign of an inevitable future shift towards UK hydrogen dispersal.

Amongst the featured countries Norway is the richest due to discovering huge oil fields off its coast during the 60s. All national oil revenues are deposited in a Government Pension Fund, the largest sovereign wealth fund in the world. The state controlled scheme currently invests in over 9,000 global companies.

The total value of this fund is around 11 trillion kroner – or $1 trillion. The Norwegian government can afford to fund its national obligations in health, education and welfare through gained interest alone. Norway retains its wealth through consistently astute financial decision making.

Careful financial management is a discipline that the Norwegian government take seriously. Norway does not gamble on potential, or if Norway does gamble, they gamble well.

Norwegian state controlled oil and gas company Equinor ASA have announced plans to invest considerably into blue hydrogen manufacturing. The company is expected to deliver 100 billion kroner ($11.7 billion) hoping to encourage an international hydrogen economy by 2035.

Equinor have also signed a deal with UK gas distributer Cadent to plan out a hydrogen transition in Lincolnshire, UK. Equinor hope to hold a 10% share of the global hydrogen market, equating to around 8 gigawatts. 1 gigawatt of power produces the same amount of energy as 3.125 million solar panels.

Aside from state owned enterprises the Norwegian government also plan to double state funding for hydrogen projects. Originally NOK 100 million was designated towards these endeavours, a later revision of national funding has increased this figure to NOK 185 million (18.4 million euros.)

Additionally, a hydrogen research centre costing NOK 1.5 million will be constructed and funded with up to NOK 30 million (3 million euros) a year, for the next 8 years starting from 2022.

Norwegian infrastructure and market development of hydrogen will also receive an annual funding of NOK 100 million ($11.7 million). Financial backing will be made available to the Research Council of Norway who will oversee demonstration and pilot projects that encourage the early phase advancement of hydrogen.

Green hydrogen also features amongst current projects undertaken by Norwegian companies. A consortium led by an American – French energy company TechnipFMC is working on the construction of an offshore green hydrogen energy production system. This pilot project costs EUR 9 million and concentrates on converting offshore wind into green hydrogen.

As of writing the Norwegian government have granted 1 billion Norwegian kroner, ($111 million - $1 = 8.9916 Norwegian krone) to three projects that focus on producing clean hydrogen and ammonia. Of the three projects two include hydrogen.

Yara – an agricultural and environmental company will receive 283 million krone to produce emission-free hydrogen and ammonia at their fertilizer factory in Heroeya, Norway. Steel manufacturer TTI, (TiZir Titanium & Iron) has accepted 261million Krone to replace coal with hydrogen at their smelter in Tyssedal.

It should also be mentioned that since the Russian invasion of Ukraine Equinor has pulled out from all current investments in Russia and also begun withdrawing from all previous projects. It has been reported that the Norwegian government ordered its sovereign wealth fund to discard $3 billion in Russian investments.

Norway harbours an exemplary recent track record of financial investment success and openly approves hydrogen. As Norway is publically embracing hydrogen, UK end users should understand that if a country, such as Norway, who holds experience at every level of oil, gas and adroit financial decision are transitioning to hydrogen, UK energy options may also be influenced towards hydrogen usage.

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