Shell has abandoned its plans to develop a low-carbon hydrogen facility in western Norway, citing the absence of sufficient market demand. The decision comes shortly after Equinor canceled a similar project in the region. Both projects aimed to produce blue hydrogen, which is generated from natural gas combined with carbon capture and storage, but have struggled to gain traction due to high costs and limited demand.
Blue hydrogen has been promoted as a potential solution for reducing industrial carbon emissions in Europe and meeting environmental targets. However, its cost competitiveness compared to conventional energy sources has hindered widespread market adoption. "We have not seen enough demand for blue hydrogen to justify moving forward with the project," a Shell representative in Norway explained.
Equinor made a similar announcement last week, stating that its plans to export blue hydrogen from Norway to Germany were scrapped due to excessive costs and lack of demand.
Shell, in collaboration with partners Aker Horizons and CapeOmega, had initially intended to produce around 1,200 metric tons of blue hydrogen per day by 2030 at the Aukra Hydrogen Hub, located near the company’s Nyhamna gas processing facility. However, the partnership ended in June 2024, and Shell has confirmed it has no other active hydrogen projects in Norway at this time.
These cancellations highlight the challenges facing large-scale hydrogen projects as companies seek to balance climate goals with economic realities. Despite its promise as a clean energy source, blue hydrogen has yet to achieve a cost structure that supports broad market adoption.
