Today, a study was presented regarding the role of green hydrogen in the Norwegian economy and its potential development in Latvia. Currently, Norway produces 10% of Europe's total green hydrogen, making it the second-largest player in the industry after Germany. Latvia has also begun early-stage hydrogen technology applications in various sectors, including water transport and aviation fuel, which could potentially establish a new economic industry.
Ieva Jāgere, Director General at the Investment and Development Agency of Latvia (LIAA), stated, "I would like to thank our Norwegian partners for their collaboration and significant contribution to Latvia's green hydrogen strategy. The LIAA's portfolio currently includes several billion euros in green energy projects, the realization of which largely depends on demand. Hydrogen projects can ensure this demand and stimulate the growth of new economic sectors, such as hydrogen maritime transport, energy-intensive production, data canters, and green aviation fuel." She emphasized that stable demand for green energy is critical for the development of hydrogen projects.
The study, conducted by the Norwegian economic and policy consultancy Menon Economics, highlighted key insights from Norway's hydrogen industry and emphasized experiences that could be adapted to Latvia. Presentations at the event included contributions from Piotr Spiewanowski from the research team, Jens Berge from Norwegian Hydrogen, and Kaspars Avots of the Baltic Hydrogen Group.
Piotr Spiewanowski noted, "The development of the hydrogen ecosystem largely presents a chicken-and-egg challenge, as demand drives supply. Initiating production requires significant investments, which are stimulated by a clear demand structure. State investment in the hydrogen ecosystem can extend beyond financial contributions; structured procurement systems are also vital. Incorporating green criteria into procurement requirements could significantly accelerate industry growth."
Norway currently leads Europe's green hydrogen sector with a total capacity of 38.5 MW, making it the second-largest producer in Europe after Germany. This capacity is expected to increase to 95 MW by the end of 2025 as Norway rapidly expands its green hydrogen production with state funding, earmarking 850 million euros for the industry's development.
One of Latvia's goals in the energy sector is to become a regional hub for hydrogen production and innovation. The main challenge lies in identifying the most optimal applications for hydrogen, particularly since 30-40% of energy is lost during its production process. Norway's experience shows that this is not a significant barrier in several industries. For instance, the study mentioned Europe's largest fertilizer manufacturer, Jara, which consumes most of Norway's produced hydrogen. Maritime transport is another promising area, especially for longer routes where battery electric propulsion may not be sufficient.
Latvia is investigating the use of hydrogen at Riga Airport, alongside parallel initiatives at Liepaja, Ventspils, and Riga ports. However, Latvia's hydrogen sector remains in its early stages, lacking commercial production and stable demand. Current projects range from small-scale pilots to large-scale export initiatives. Norwegian experience highlights the importance of utilizing hydrogen-specific financial instruments only when hydrogen is the most cost-effective low-emission solution available.
An essential condition for successful public-private partnerships in hydrogen technology development will involve EU funding, which is crucial for advancing shared climate goals. The 2022 REPowerEU strategy aims to produce 10 million tonnes of green hydrogen and import another 10 million tonnes by 2030, while Europe's current hydrogen consumption stands at 7.2 million tonnes. Renewable hydrogen is projected to meet 10% of the EU's total energy needs by 2050.
Latvian companies have access to EU funding programs such as the Innovation Fund and European Hydrogen Bank financing. However, these instruments primarily target large-scale projects, making them unsuitable for most potential hydrogen users in the country. Latvia must continue developing national support programs that complement EU financing, covering both green hydrogen production and its applications.
The study can be found here: Role of green hydrogen in the Norwegian economy and its potential development in Latvia
