The Potential of Low-Carbon Hydrogen in Norway : A Linear Programming Analysis of Hydrogen Supply Chains in the Norwegian Energy System Towards 2050

Abstract

In this thesis, we conducted a linear programming analysis to assess the future potential for domestic production and consumption of low-carbon hydrogen in Norway. Our analysis is based on the Institute for Energy Technology’s long-term energy system model “IFE-TIMESNorway" (ITN), which is intended to describe the Norwegian energy system in its entirety. Our analysis in ITN has been performed according to the current-best estimates for the technoeconomic parameters of hydrogen technologies. The primary focus of our data work with the ITN model has been to expand its range of production technologies by adding steam methane reformation with carbon capture and storage, colloquially known as “blue hydrogen”. This allowed us to explore the potential of hydrogen in increased detail compared to prior analyses with ITN. In our analysis, we have analyzed production and consumption of low-carbon hydrogen, and how it flows through the energy system from a supply chain perspective. This has been analyzed through a variety of model runs intended to capture contrasting energy futures. The primary years of our analysis cover the interval 2030 to 2050. The main findings suggest that there is significant potential for low-carbon hydrogen in the Norwegian energy system towards 2050 in industry, road transport, and maritime transport. Our results indicate that the highest potential for hydrogen is as a feedstock in the metal- and chemical industry, for heavy-duty vehicles in road transport, and in the form of ammonia in maritime transport. The competitiveness of hydrogen is however highly dependent on carbon pricing as a higher CO2 tax is connected to increased volumes of hydrogen production and consumption. In addition, the availability of competing zero-emission alternatives is a significant factor for the potential of hydrogen. For current carbon pricing and its expected future increases, hydrogen is the cost-effective option for many end-use processes based on large- and/or small-scale production. However, carbon prices in excess of current and expected future values are associated with higher volumes and adoption across additional end-use processes. At large scales, steam methane reformation with carbon capture and storage is the dominant hydrogen production technology, but its position is challenged by Alkaline electrolysis if power prices are particularly low. At small scales, a combination of PEM electrolysis and alkaline electrolysis is generally preferred, but PEM is increasingly competitive across the model horizon. In addition, our results suggest that hydrogen may be distributed with trucks, but only for shorter distances within spot price regions.