Energy-Intensive Industry as a Practical and Cost-Effective Vector for Blue Hydrogen Exports – A Norwegian Case Study

Abstract

As political will gathers behind the ideal of rapid decarbonization, the future looks increasingly dim for oil & gas exporters. CCS offers a pathway for continued operation in the longer-term as the world decarbonizes, but this is not a straightforward solution. Many oil & gas importers are opposed to CCS and are instead looking to replace oil & gas imports with greener alternatives. The alternative solution of converting cheap locally produced hydrocarbons to hydrogen and electricity with CCS substantially increases the cost and complexity of energy exports. This study explores an alternative solution: local utilization of clean hydrogen from natural gas to produce energy intensive industrial products like steel. Such products are much easier to export than hydrogen or electricity. The system-scale modelling assessment presented in this study shows that the energy costs of clean steel using blue hydrogen in Norway is 174 €/ton cheaper than when it is produced using green hydrogen in Germany. This difference amounts to about a third of total steel production costs, giving oil & gas exporters like Norway a large competitive advantage.