Norway implements tax incentives for hydrogen-fuel cell vehicles

Publish date: December 8, 2004

The Norwegian government has proposed an incentive involving the removal of vehicle taxes–including registration fees and annual taxes for hydrogen fuel powered vehicles be removed as of January 1st next year. The issue under discussion by Norwegian parliament and only minor formalities remain in the political process, officials said.

The new Norwegian tax incentives for hydrogen fuel cell based transport could serve as a model for other countries in Europe and worldwide hoping to pursue the emissions-free technology, a move Bellona strongly encourages.

The proposal to remove repeal taxed for hydrogen cell fuel vehicles was made by the Norwegian government as a result of steady and continuous pressure from NGOs, such as Bellona as well as well as recommendations from the government’s official working group formed to develop a national hydrogen programme.

A history of zero-taxes on zero-emissions

Norway already has a strong history of tax incentives for cars running on alternative energy sources such as electricity. In 1990, registration taxes were removed for electric cars. Shortly thereafter, in 1996, annual vehicle taxation, road tolls were scrapped for them. In 2001, their Value Added Tax (VAT) was also removed.

These tax incentives have made the use of electric cars in Norway more attractive, but perhaps the strongest boost in driver demand came for them in 2003 when electric cars were given the right to drive in bus lanes, the prohibition of which is a constant headache and source of traffic snarls for drivers of standard cars.

Reducing barriers for commercialisation

The Ford Focus 1,8 l and Opel Zafira 1,6 l —which are similar to the Ford Focus FCV and the Opel Zafira HyGen3—fetch approximately EUR 10,500 in tax-benefits. The FCHV-4, which is a larger vehicle from Toyota, gets a total tax slash in Norway of EUR 23,000. Norwegian vehicle taxes are calculated, in order of importance, on the bases of vehicle weight, engine capacity and engine power.

At current, these tax incentives for hydrogen cars make little difference in comparison to the cost of present hydrogen cars and the lack of infrastructure to support them. But as the market for hydrogen fuel cell vehicles grows and manufacturing costs are reduced, the tax incentives will play an important role in their commercialisation.

In this sense, Norway could become a large-scale testing ground for large, powerful hydrogen fuel cell vehicles.

Norwegian industry is also fertile territory from a hydrogen industry point of view, as the proposal for a national hydrogen programme is strongly focused on clean hydrogen production from fossil fuels.

Securing a hydrogen supply from clean fossil fuels—a long way to go but worth the trip

For several years, a debate has simmered in Norway over whether to build gas fired power plants with carbon dioxide-capture and storage or to build conventional power plants, which emit carbon dioxide. One energy company, Hammerfest Energi, has announced the construction of the first power plant with carbon dioxide capture and storage, scheduled to go on line in 2007.

The availability of renewable energy for hydrogen production is scarce, to be sure, and renewables have a long way to go before they can significantly contribute clean energy to both the stationary power market and the transportation sector.

Carbon dioxide-capture technology can be applied via large scale reforming of fossil fuels into hydrogen. In this way, the supply of hydrogen can be secured with fossil fuels without contributing to climate change.

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