An ambitious Norwegian hydrogen strategy cannot solely rely on subsidies
Op-ed by Thomas Reinertsen, CEO, Hydrogen Mem-Tech, first published in Norway’s Dagens Næringsliv, June 19th, 2023.
A robust and ambitious hydrogen strategy in Norway should be applauded. But we need more urgency, and solid contributions from investors and major industry players. Well-intentioned state subsidies alone won’t get the job done.
"Norway should take a leadership role on hydrogen, and we have all the means necessary to make it happen," said NHO leader Ole Erik Almlid as The Norwegian Confederation of Business and Industry (NHO) and The Norwegian Confederation of Trade Unions (LO) unveiled their proposal for a new Norwegian hydrogen strategy this week.
He is right, and this is an admirable ambition. We know that hydrogen is key to cutting emissions, fast. Norway is poised to play a leading role in a new hydrogen revolution, drawing on decades of experience from our successful oil and gas ventures.
However, the report's proposed strategy leans too heavily on subsidies and policy tools. "A successful Norwegian hydrogen venture depends on active facilitation and risk relief from Norwegian authorities, along with fruitful public-private cooperation," it asserts.
Hydrogen has enormous potential as a clean and sustainable energy source. It can play a pivotal role as we transition to becoming a low-carbon society. Hydrogen should constitute a substantial part of a more renewable energy mix. But to make this happen we need to commit, now.
Norway has a rich history of hydrogen technology innovation, starting with Sam Eyde’s founding of two major industrial players, Norsk Hydro and Elkem, over a century ago. Still, our hydrogen economy has never fully taken off. Perhaps we relied too much on our abundant oil and gas resources, and underestimated the damage they could cause.
And suddenly we find ourselves facing a global energy shortage. It will soon become prohibitively expensive – if not illegal – for industrial players to emit CO2 at today’s levels. New solutions and new technology are emerging, and there's no shortage of good policy intentions. But the technological quantum leap we need now won’t happen through subsidies and public policy alone.
To bring about this vital energy shift I believe we need urgency and risk-tolerant investment. Creating sustainable solutions requires strong industry-wide determination to make companies competitive and profitable at an earlier stage in their growth. And for this, we need increased investment and greater risk appetite. The most effective way to cut emissions faster is to lower the threshold for investing in environmental technology.
For this reason, Norway’s new hydrogen strategy should aim squarely at reducing the costs and increasing the efficiency of our hydrogen solutions. That way, they can swiftly enter into market competition without needing extensive subsidies.
A policy toolkit is crucial and well-suited to a company’s founding phase, when research and development are the primary focus. However, the intermediate phase – the costly pilot stage – is the Achilles heel.
A case in point is Climit, a national collaboration between The Research Council of Norway and Gassnova for researching and developing CO2 management technology. For us at Hydrogen Mem-Tech, this programme enabled us to establish a pilot at Equinor's Tjeldbergodden site. Without this support, we could have had to seek collaborators abroad.
The pilot phase is expensive, and demands more risk tolerance and investment than what a well-intentioned policy toolkit can solve alone. When our last funding round concluded in 2022, based on practically market-ready technology, we mostly saw investor interest coming from abroad. This illustrates our current challenge: To cultivate pioneering Norwegian hydrogen technology, risk-tolerant Norwegian capital must start to play ball.
A policy toolkit can absolutely incentivise an emerging hydrogen sector. But it cannot put all the necessary work into action alone. Our major industry players must show leadership by participating actively in the intensive research and development required to accelerate progress.
We already have technology that can clean up Norwegian natural gas. We are all set for success. But to make it happen, we need to seize this opportunity now. Otherwise, we risk others taking the lead in the global clean energy race.