Hydrogen law, regulations & strategy in Norway

In Norway, 225,000 tonnes of hydrogen are currently produced from natural gas for use in industrial processes. The production of hydrogen from natural gas (“grey” hydrogen) has a high emission of CO2, but the cost of hydrogen produced this way is only a third of the emission-free alternative.

The Norwegian government’s goal is that, by 2050, the greenhouse gas emissions will be reduced with 90 and 95 per cent compared with levels in 1990.  Norway has, as part of the follow-up to the Paris Agreement, announced a strengthened climate target to reduce emissions with 50 per cent and up to 55 per cent by 2030, compared with 1990.

To reach this goal, the government will implement a strengthened focus on hydrogen-related research and technology development. In many sectors, work is now being done to develop solutions for hydrogen as an energy carrier. Several projects are in the process of testing hydrogen for various energy purposes

Hydrogen can play an important part in the transport sector. For passenger vehicles and local transportation, battery powered vehicles seem to be the preferred technology, but in heavier vehicles and the maritime sector, hydrogen fuelled transport is seen as a possible alternative to achieve emission-free transportation.

For maritime transport, there are several planned and ongoing projects. For instance, Norled AS is investing in hydrogen and will start the world’s first hydrogen ferry, the “MF Hydra”. The ferry became operational in July 2021, initially with a battery, and will later switch to hydrogen during the spring of 2022 when the hydrogen plant is completed.

BKK, Equinor, and Air Liquide want to build an industrial plant to produce liquid hydrogen, which can be used as fuel in shipping.

The use of hydrogen in the industry falls into three categories: used as an input factor in production, as an energy carrier, or used in the process itself. In addition, there are some industrial processes where hydrogen is currently produced as a by-product.

Almost all hydrogen used in Norway today is used as an input factor in the chemical industry and in refining petroleum products. The hydrogen used today is almost exclusively produced by reforming natural gas without capture and storage of CO2 (i.e., “grey” hydrogen). If carbon is captured and stored, or the production is done by electrolysis, the emissions will be significantly reduced.

Tizir in Tyssedal are working on developing and testing technology required to use hydrogen as a reducing agent in titanium oxide production.

The production and processing of low carbon hydrogen is more expensive than the current process for producing hydrogen from natural gas without carbon capture and storage.

There are few large-scale CCS projects (“blue” hydrogen), therefore it is difficult to estimate a cost of capture and storage of CO2. Prerequisites such as a significant market for hydrogen, access to natural gas infrastructure, and infrastructure for CO2 capture and storage entails a significant need for space and therefore geographical restrictions with this production method.

The production of green hydrogen via electrolysis is significantly more expensive than reforming methane gas. Electrolysers today are produced in small quantities and have small capacities. It is expected that prices will fall if the demand increases, and green hydrogen can be produced at a larger scale.

Uncertainties regarding price and demand can therefore pose a problem for the successful development of hydrogen projects.

In common with many jurisdictions, Norway does not have a well-defined legal and regulatory framework for hydrogen projects in the various sectors. There is no complete framework that covers the hydrogen value chain, and navigating can be challenging.

The Norwegian energy market is regulated by the Act relating to the generation, conversion, transmission, trading, distribution, and use of energy etc. (the “Energy Act”).

The legislative history for the Energy Act shows that the production, storage, and transport of hydrogen does not fall under the Energy Act. However, facilities for production of hydrogen must comply with the Energy Act and its regulations as outlet customers in the grid – just as other industrial plants.

The production of hydrogen is in accordance with the Pollution Control Regulations appendix 1 4.2 an activity that is covered by the requirements for permits in section 36-1 (2).

The production of hydrogen by electrolysis does not, in principle, cause any pollution, but a permit is still required.

Requirements for the application for a permit are listed in said Regulation sections 36-2 and 36-3.

Possibilities for mixing hydrogen into natural gas, to use pipeline networks intended for natural gas transportation, are being looked at. This can contribute to an early introduction of hydrogen in export to Europe and the hydrogen can be produced from renewable or fossil production. This will make it possible to use the huge European natural gas network to store and transport hydrogen.

The Planning and Building Act applies to all types of activities related to real estate. Implementation of any measure can only take place if they are not in conflict with the Act and associated regulations and the municipal area and zoning plan. Measures can only be implemented if no prohibition in law, regulations, plans or the like prevents it.

Plants for production of electricity with hydrogen as an input factor – for example, fuel cells or any gas turbines – require a plant license in accordance with the Energy Act Section 3-1, if the plant is over the threshold for a licensing obligation. Facilities that receive such license, do not require a separate permit pursuant to the Planning and Building Act, see section 1-3 (2).

Further, a licence from the regulatory authority must be acquired to trade in electrical energy, as stated in the Energy Act section 4-1.

Natural gas is “petroleum” according to the Petroleum Act. To develop a petroleum deposit, the licensee will have to submit to the Department for approval a plan for the development and operation of the petroleum deposit (“PUD”). A separate plan must be approved for plants and operations of facilities for transport and for the utilisation of petroleum (“PAD”), if this is not covered by an approved PUD.

Regulation for the Petroleum Act [Forskrift til petroleumsloven] chapter 4a applies to the capture, transport, and storage of CO2 in the petroleum sector, which is implemented in accordance with the plan for development and operation approved pursuant to section 4-2 (1) of the Act.

Before injection and storage of CO2 underwater, the licensee will need a permit. The licensee will also need to ensure that appropriate dispositions may be made in the form of financial security or equivalent to ensure that all obligations arising from the Regulation can be fulfilled. The financial security must be valid and effective before the injection starts.

Hydrogen gas is categorised as a flammable gas category 1, and therefore falls within the scope of the Act relating to the prevention of fire, explosion, accidents involving hazardous substances, and the fire service. The Act applies to general obligations to prevent fire and explosion, as well as central and local organisation and implementation of fire and explosion protection work.

The Act sets out several obligations such as:

1. the duty to prevent and limit the harmful effects of fire, explosion, and other accidents.
2. obligations to provide the necessary safety measures to prevent and limit fire, explosion, or other accidents.
3. carry out systematic health, safety, and environmental work (internal control) to ensure that requirements laid down in or pursuant to this Act are complied with.

Handling of hydrogen is regulated in the Regulations on the Handling of Dangerous Substances (Forskrift om håndtering av farlig stoff). The Regulations stipulate, among other things, that a risk assessment for hydrogen plants must be prepared, and that the plants must be built and inspected according to a recognised norm. To achieve sufficient safety for third parties, it is important that the handling of hydrogen takes place at a sufficient distance from surrounding objects. The regulation requires companies to document whether there is a need for spatial measures restrictions on hydrogen handling facilities. This is important to consider when hydrogen plants are to be established.

Equipment used for handling hydrogen must be in accordance with the requirements of the Regulation on the Pressure Equipment (forskrift om trykkpåkjent utstyr).

Companies that store five tons of hydrogen or more will additionally be covered by the Regulation on major accident (Storulykkeforskriften). The last two regulations are directive-based, which means that the requirements are equivalent to the regulations in other EU/EEA countries.

Furthermore, compliance with the Regulation on Health and Safety in Explosive Atmosphere is necessary. The Regulation concerns the protection of workers and other persons, as well as material values against the dangers arising from explosive atmospheres, setting out requirements for protective equipment and protective systems.

Hydrogen must be transported in accordance with the requirements of the Regulation on Carriage of Dangerous Goods by Road (forskrift om landtransport av farlig gods). This regulation is directive-based and is equivalent to the regulation in other EU/EEA countries.

The Regulation sets general requirements for transport personnel, clear safety marking and packaging, and for the equipment and materials used for the transport of dangerous goods.

Vehicles used for transport must meet the relevant requirements in “Accord relatif au transport international des marchandises dangereuses par route” (“ADR”) chapter 9.

The hydrogen market in Norway is at an early stage with significant prospects for growth over the coming years. The Ministry of Petroleum and Energy (“MPE”) published a Roadmap for Hydrogen in its White Paper to the Norwegian Parliament in June 2021.

The long-term vision of the MPE is to have a well-established market for the production and use of hydrogen in Norway by 2050, with hydrogen being, where this is a good solution, used as an input factor in industrial activities, as fuel in ships and vessels both in coastal waters and for long-distance transport and as fuel for heavy vehicles by road. Furthermore, the MPEs vision is that the Norwegian energy and supplier industry and related industries are international leaders in the export of hydrogen and certain hydrogen technologies and solutions, creating economic growth to the benefit of the Norwegian society.

In the short term, by 2025 the vision of the MPE is to support the development of technology through pilot and demonstration projects for the production and use of pure hydrogen in maritime transport, in heavy transport by road, and in the industry. The projects shall contribute to early market introduction and market development, as well as facilitating the development of geographical hydrogen hubs. The government will facilitate for collaboration with private actors to establish:

1. five hydrogen hubs for maritime transport, with opportunities for the development of associated land transport solutions based on hydrogen;
2. one or two industrial projects with associated production facilities for hydrogen, in order to demonstrate value chains with potential for global dispersal; and
3. five to ten pilot projects established for the development demonstration of new and cost-effective hydrogen solutions and technologies.

The MPE also intends to strengthen R&D and the demonstration of new hydrogen solutions and technologies by establishing a research centre for hydrogen and ammonia.

In the medium term, by 2030 the MPE’s vision is that hydrogen as an energy carrier has been established as a real alternative in the maritime sector and is maturing as a good alternative in the Norwegian industry. The first projects in the maritime sector without need for government funding are being planned. The MPE’s vision is to contribute to a development that enables:

1. a network of geographically dispersed, demand-based hydrogen hubs in line with the supply vessels and vehicles;
2. hydrogen vessels that are a competitive and safe alternative for shipping in Norwegian waters and short sea shipping areas;
3. realisation of full-scare industrial hydrogen projects with significant dispersal potential for Europe and the rest of the world;
4. the use of hydrogen as a competitive alternative to fossil energy; and
5. Norwegian hydrogen activities to be linked to the development of a market for hydrogen in Europe in the form of export of goods and services.

The Roadmap also states that the government intends to carry out an assessment of new instruments, such as “Contracts for difference” (“CfD”), aimed at realising large industrial projects such as large-scale production and use of hydrogen. In this context, CfD means a subsidy model in which both positive and negative deviations from a pre-set reference price are compensated for.

It is assumed that, by 2030, the technology for the use of hydrogen at sea and in heavy transport by road will mature. Eventually, hydrogen and/or ammonia could also become a low-carbon fuel for larger ships/vessels. The need for hydrogen hubs and infrastructure will depend on the demand for hydrogen. In a start-up phase, the demand for hydrogen for maritime purposes is expected to be limited. Modular production plants for green hydrogen will therefore be well suited for this phase.

The demand for hydrogen for industrial purposes will depend on the establishment of larger hydrogen production plants. It can therefore provide a basis for establishing hydrogen production based on natural gas with CO2 management. However, such production facilities are dependent on the availability of CO2 storage. It is therefore unlikely that blue hydrogen can be produced earlier than 2025 in Norway.

In September 2021, there was a Parliamentary election in Norway, resulting in the Labour Party taking over from the Conservative Party. It is relatively safe to assume that the work with the Energy Report and the guidelines for hydrogen will proceed also after a new government has been formed; the Labour Party has expressed that the Energy Report is a good foundation for the work to be done in shaping the Norwegian energy sector for years to come.

]There has been a lot of news about hydrogen projects in Norway, including several IPOs of technology companies, specific projects for the use of hydrogen as fuel for larger vehicles and ships, and plans to use hydrogen to cut emissions in industrial processes.

A selection of Norwegian hydrogen projects:

1. Sintef and Varanger Kraft have received NOK 50 million from the EU to test hydrogen production from surplus power from the Raggovidda wind farm in Finnmark.
2. Meløy Energi, Nel, and Greenstat are the companies behind Glomfjord Hydrogen, which has a project for production of hydrogen using electrolysis. It should be able to deliver around one tonne a day when local demand increases.
3. Reinertsen New Energy has tested a plant for hydrogen production from gas combined with CO2 capture at Equinor’s gas plant at Tjeldbergodden.
4. Hellesylt Hydrogen Hub is a collection of actors in hydrogen. They have received NOK 37.6 million from Enova’s Pilot-E program for a facility that will supply hydrogen to ferries and cruise ships in the Geirangerfjord.
5. The Tizir smelter in Tyssedal wants to replace coal with hydrogen in their production.
6. The shipping company Wilhelmsen and partners such as Equinor and Norsea Group will launch the hydrogen-powered cargo ship “Topeka” in 2024. The ship will transport goods between oil bases along the Norwegian coast. It will also carry liquid hydrogen – in addition to using hydrogen as fuel.
7. Nasta AS is cooperating with Sintef and Skanska, among others, in developing a 30-tonne crawler excavator driven by hydrogen and batteries. 
8. Norled and a series of partners have been given economic support from the EU through the Flagship project to, amongst other things, review if one of the local ferries can start using hydrogen instead of biodiesel, as was the original plan. 
9. Sunnhordaland Kraftlag, Kvinnherad kommune and Gasnor have signed a cooperation agreement in order to determine the possibilities of starting a large-scale production of floating hydrogen in Kvinnherad. 
10. BKK, Equinor and Air Liquide are planning to develop a complete supply chain for production, storage, transport and use of hydrogen in the maritime industry.