Why the Norwegian government may set up a state-owned hydrogen company

The Norwegian government is considering creating a state-owned hydrogen energy company or expanding existing state businesses’ ventures into hydrogen to drive green energy investment. 

A car being filled with hydrogen fuel.
Hydrogen can be used to fuel cars among other things, pictured is a car being filled with hydrogen. Photo by Possessed Photography on Unsplash

The Norwegian government is exploring the option of setting up a state-owned hydrogen company and has spoken to two energy enterprises it owns or part-owns in Equinor, formerly Statoil, and Statkraft, which is in the hydroelectric industry, about their ventures into hydrogen. 

Hydrogen is a zero-carbon fuel source that can be used in fuel cells or internal combustion engines, with the only byproduct being water. 

Climate minister Espen Barthe Eide has said that a state-owned company would drive significant investment into hydrogen energy in Norway. 

“The idea is a bit like that it should not compete against the current companies, but be an engine to drive large hydrogen investments in Norway,” Eide told business and financial media outlet E24

He said a new state-owned company, along with expanding other government-owned energy firms investments into hydrogen were ways of achieving more investment in green energy in Norway. 

“A state-owned company is not a goal for us, but a means. We only use it as long as it is meaningful,” he said.

He added that Equinor and Statkraft were both possible candidates for increased investment into hydrogen energy. The government owns 67 percent of Equinor and 100 percent of Statkraft. 

Both companies confirmed they have been in dialogue with the government regarding investments in hydrogen. 

The climate minister said a state-owned hydrogen company would also help pull everyone in a greener direction. 

“When you really want to carry out a full decarbonisation, you must have energy sources other than oil, gas and coal,” Eidie said, adding Norway would be able to make both green and blue hydrogen energy. 

Blue hydrogen is obtained by splitting natural gas into hydrogen and carbon and capture the greenhouse gases, mitigating the environmental impact on the planet. 

Green hydrogen is hydrogen fuel created in plants that use entirely renewable energy sources. So far, only 1 percent of hydrogen is produced this way. 

Last week trade minister Jan Christian Vestre said that a state-owned hydrogen firm, in the long run, could have a similar impact on the country as Equinor had. 

“I have great faith in the state as an entrepreneur, and we also have a history in Norway where state-owned companies become very profitable so that the community gets its fair share of profits. Equinor is a good example of this,” he told trade union newspaper Klassekampen.

Norway puts its oil revenues into the Government Pension Fund, the largest sovereign wealth fund in the world. In simple terms, the Government Pension Fund, or oil fund, is a giant savings pot that acts as a source of government funding. 

READ MORE: Why is Norway such a wealthy nation?

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Norway rules out 2022 oil licences in unexplored areas

Norway will not grant new oil exploration licences in virgin or little-explored areas in 2022 under a political compromise on Monday that hands a modest  victory to opponents of fossil fuels.

Norway rules out 2022 oil licences in unexplored areas
A photo taken on August 30, 2021 shows the Petroleum Museum in Stavanger, Norway, built to show the history of Norway's oil exploration. Norway is the largest producer of hydrocarbons in Western Europe. In the face of the climate emergency, voices are being raised to abandon fossil fuels for good. Petter BERNTSEN / AFP

The Scandinavian country’s governing centre-left coalition supports continuing oil and gas activities but does not have a parliamentary majority, making it reliant on socialist MPs who prioritise green issues.

As part of a compromise on the draft 2022 budget, three parties agreed on Monday that Norway — Western Europe’s largest hydrocarbon producer — would not hold a 26th so-called “ordinary” concession round next year.

This mechanism has allowed oil companies to apply for exploration in previously unexplored areas of the Norwegian continental shelf since 1965.

But the deal does not rule out awarding oil licences in already heavily exploited areas.

Since the North Sea has been extensively explored, the agreement mainly concerns the Barents Sea in the Arctic

The oil industry was a major issue in legislative elections in September, indicating Norway’s growing difficulties in reconciling environmental concerns with exploiting energy resources.

In the 25th concession round in early 2021, only seven oil companies, including Equinor, Shell and Lundin, applied — the lowest number since at least 1978 according to local media.