Hystar AS plans a new factory for hydrogen machines at home in Norway before expanding into North America, where rich subsidies are on offer for the green transition.

The firm plans a 4-gigawatt electrolyzer plant outside Oslo in 2025, with construction starting early next year, Chief Executive Officer Fredrik Mowill said in an interview. The North American facility is slated to come online around 2027, he said.

The US has made ambitious hydrogen subsidies available through the Biden administration’s Inflation Reduction Act, with plans for as many as 10 hydrogen hubs. Canada offers an investment tax credit for clean hydrogen production. The European Union, on the other hand, has been slow to catch up, making the other side of the Atlantic more attractive to the bloc’s energy companies and manufacturers.

Read more: Biden’s Hydrogen Hub Plan Sparks $8 Billion Race Among US States

“We are going to spend the next several months to review which location we like the most,” Mowill said. “And part of that is the financial support and, part of it are other even more important factors like access to the right talent and suppliers.”

He declined to say how much the factory in Norway would cost and said the scale of investment in North America would depend on the size of the grants.

Hydrogen is increasingly expected to play a big role in curbing industrial emissions and for powering cars, trucks and ships as well as traditional industrial plants, including for steel. The gas is made in electrolyzers by splitting water with electricity, and can be burned to create energy without releasing carbon dioxide.

With the hydrogen industry, like so many others, facing headwinds as equipment and financing costs are increasing, getting the right support will be key.

In Europe, the industry’s progress is stalling. More than 500 projects have been announced as of September, yet only around 5% have secured the financing to start construction, according to data from BloombergNEF.

“Inflation is increasing capital and financial costs, threatening the bankability of projects across the entire hydrogen value chain, which are highly capital intensive,” the International Energy Agency said in a report published last month.

Europe’s biggest battery maker, Sweden’s Northvolt AB, will build a factory in Canada, a decision influenced by access to clean power and critical raw materials alongside generous subsidies.

Read more: BMW Supplier Northvolt Gets Billions From Canada for Plant

What makes Hystar’s design different is a significantly thinner membrane than conventional PEM electrolyzers, providing improved efficiencies as it aims to scale up production, the company has said.

Last month, the firm announced a project that will test a high efficiency electrolyzer planned by oil major Equinor ASA and fertilizer maker Yara International ASA. It will be commissioned in the second-half of 2023.

--With assistance from Kari Lundgren.