(Bloomberg) -- Floating terminals to import natural gas allowed Europe to overcome the worst of the energy crisis. Their next task could be to help the continent’s sluggish hydrogen markets take off.

Hoegh LNG Holdings Ltd., a provider of floating storage and regasification units for liquefied natural gas, is working on a hybrid ship that can deliver gas and hydrogen in parallel.

Three bigger tanks in such a vessel would be dedicated to LNG, while the smallest tank at the front would store ammonia, a carrier for hydrogen. A module for converting the ammonia into green hydrogen will be installed on board. Such ships can start operating by 2028, according to Thomas Thorkildsen, chief commercial officer at the Norwegian firm.

While hydrogen — especially its green variant — is crucial to Europe’s energy transition goals, buyers have been reluctant to make commitments because of its high costs. Hoegh’s approach of starting small works on the growing acceptance that natural gas will continue to play a role during the lengthy transition to green fuels. 

Read more: Clean Hydrogen Supply Forecast to Grow 30x by 2030: BNEF Chart

“One of the challenges that you will have when we start building hydrogen markets is that in the beginning, demand is going to be limited,” Thorkildsen said in an interview. “It doesn’t make a lot of sense having a huge onshore tank dedicated to ammonia or hydrogen before the demand in the market is there.”  

The market is looking at ammonia as a medium for transport and storage of green hydrogen, with trade eventually evolving to resemble that of LNG. Costs to produce ammonia as well as green hydrogen are expected to decline in coming years, making it competitive with fossil-fuel-based alternatives, according to BloombergNEF. 

Read: Green Ammonia Cost Parity by 2030 But Demand Must Scale: BNEF

For now, demand for import terminals for LNG is still growing as Europe transitions from Russian pipeline gas to consume more tanker-borne fuel, Thorkildsen said. But an interest in the transporting hydrogen in parallel is growing in Europe, he added.

“The capacity in that unit is perfect to allow the start of building a market,” he said. “It is a very flexible solution, which allows you to maintain natural gas sendout, because natural gas is here to play an important role.”

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