Norway’s Equinor has scrapped plans to export so-called blue hydrogen to Germany because it is too expensive and there is insufficient demand, a spokesperson for the energy company said on Friday.

Equinor and Germany’s RWE signed a memorandum of understanding in January 2022 to build a hydrogen supply chain for German power plants to help reduce greenhouse gas emissions.

The plans included producing hydrogen from natural gas in combination with carbon capture and storage – known as blue hydrogen – in Norway and exporting it to hydrogen-ready gas power plants in Germany via the world’s first offshore hydrogen pipeline.

“The hydrogen pipeline hasn’t proved to be viable. That also implies that hydrogen production plans are also put aside,” Equinor spokesperson Magnus Frantzen Eidsvold told Reuters.

“We have decided to discontinue this early-phase project,” he added.

The pipeline was not RWE’s project, but required support from both Norway and Germany, the German company said in emailed comments.

Last year, Equinor CEO Anders Opedal said the cost of the total supply chain could run into the “tens of billion euros”, while the pipeline alone would cost some 3 billion euros ($3.35 billion).

Eidsvold said Equinor also could not continue maturing the projects without firm long-term commitments from European buyers to import hydrogen.

“We are not able to make this kind of investments when we don’t have long-term agreements and the markets in place,” Eidsvold said.

Plans to develop hydrogen-ready gas power plants in Germany with RWE will go ahead but hydrogen for them will be procured on the continent, not exported from Norway, Eidsvold said.

The German government has been in intensive talks on the issue with Norway, a German economy ministry official told Reuters on Saturday.

The official said the new plan now includes converting Norwegian gas into blue hydrogen in the Netherlands and shipping the captured carbon dioxide back to Norway for storage.

RWE said hydrogen-ready gas power plants could start production at earliest from 2030 provided the German government approves a support regime for such plants.

Equinor will continue other early-phase hydrogen projects, such as in Britain and the Netherlands, as well, Eidsvold added.

By: Reuters / September 23, 2024