Norway is putting yet more government money into cracking the future fuel “chicken and egg” conundrum despite funding of $200m over two years reaping scant rewards.
Funding agency Enova SF has allocated fresh funds from the government to the country’s maritime sectors in a bid to make fuels available and get vessels built that can and will use them.
The agency has had limited success in stimulating the construction of hydrogen or ammonia-fuelled vessels. It has pumped NOK 2.2bn ($200m) into such projects since 2022 but has not seen any of the schemes realised.
Enova has pinned the slow progress on the price of building greener vessels.
The agency released a statement late last year detailing its position: “Enova supported five hubs for hydrogen for maritime transport ... With these projects, together with support for over 20 hydrogen and ammonia vessels, both the project owners and we believed that the first vessels would hit the water. Now, almost two years later, we see that this has largely been absent.”
So, can its latest round of funding move the dial? This time the agency is broadening its support beyond subsidising the construction of hydrogen and ammonia-fuelled vessels to develop fuel availability by helping projects to build bunker hubs for the fuels around the Norwegian coastline — a two-pronged approach that has prompted the agency’s chicken and egg analogy.
Enova head of maritime transport Rune Holmen told TradeWinds the agency plans to have its funding criteria for hub programmes by the summer and that the window was open for applications for help with vessel financing.
“The purpose of our new subsidy scheme is to build fully functional value chains for hydrogen and ammonia,” he said.
He added Enova does not expect greener newbuildings without subsidies until a carbon price makes future fuels cost-competitive, but building up the value chains will help Norway and the maritime sector prepare for when that happens.
“There’s a lot of learning that is necessary to use hydrogen and ammonia — there’s technical, safety and bunkering standards, etc. There is a whole ecosystem that has to learn, and getting those value chains ready when the market conditions are ready is what we are doing.”
Holmen said the agency will release details of its funding proposals for the ammonia and hydrogen hubs later this year but added there will likely be two separate mechanisms, recognising that hydrogen production will probably need to be close to the port bunkering station while ammonia can be transported more easily and therefore produced more remotely.
These programmes are for developing national fuel supplies, not for exports.
Subsidy window open
The two vessel programmes are more advanced and Norwegian companies seeking support have until mid-March to apply. The mechanism is competitive, with Enova criteria dictating that requests seeking a lower percentage of support are more likely to get funding.
Holmen declined to say how much of the Enova budget will go into subsidising newbuildings or retrofitting ships, nor the fuel hub programmes that are under development.
However, subsidies will not run as far as subsiding bunker prices in Norway.
Holmen said this is something the markets themselves would determine, but he is sure that there are market drivers such as shipping customers that are making low-emission demands.
When asked why the Enova projects focused on ammonia and hydrogen as a fuel and not methanol, Holmen said that methanol is already well developed as a solution, and e-methanol is already under production in Norway, albeit from natural gas. It is a question, he said, of renewable electricity prices that will determine price and demand.
Enova is also set to launch another subsidy scheme to further support zero-emission electric vessels, with a focus on building up the charging infrastructure around Norwegian ports, notably where grid systems may not be robust enough for potential need.
