Norwegian energy giant Equinor has scrapped plans to export "blue hydrogen" to Germany, citing high costs and insufficient demand to justify the project, a company spokesperson said Friday.

The project, announced in January 2022, involved a first-of-its-kind offshore hydrogen pipeline that would transport blue hydrogen, produced from natural gas with carbon capture and storage (CCS), from Norway to power plants in Germany.

"The hydrogen pipeline hasn't proved to be viable," said Equinor spokesperson Magnus Frantzen Eidsvold, adding that the company put aside the hydrogen production plans and discontinued the early phase of the project due to cost factors. 

Equinor CEO Anders Opedal previously estimated the entire supply chain could cost "tens of billion euros," with the pipeline alone at €3 billion (US$3.35 billion). Additionally, the project lacked firm long-term commitments from European buyers for the hydrogen.

Despite scrapping the blue hydrogen project, the company said it would continue with its plans to develop hydrogen-ready gas power plants in Germany with German utility RWE.

 "The hydrogen for them will be procured on the continent, not exported from Norway," Eidsvold clarified. Talks are ongoing between the German and Norwegian governments on a possible alternative.

A German economy ministry official told Reuters on Saturday that discussions involve converting Norwegian gas to blue hydrogen in the Netherlands, with the captured carbon dioxide shipped back to Norway for storage.

RWE stated that hydrogen-ready gas power plants could begin production as early as 2030, subject to German government approval of a support scheme for such facilities.