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South Korean conglomerates to invest $38 billion to boost hydrogen economy

09 April 2021 Bernadette Lee

Five South Korean conglomerates and other companies have committed a combined $38 billion to boosting the country's hydrogen economy by 2030, following the enactment of a hydrogen law in February, said the Ministry of Trade, Industry and Energy (MOTIE).

In a statement in Korean released in March, MOTIE named five South Korean conglomerates - Hanwha, Hyosung, Hyundai, SK Group, and POSCO - and a number of small- and medium-size enterprises as the key players who would commit the funds for building the country's hydrogen economy in the next decade.

The move came on the back of the "Hydrogen Economy Promotion and Hydrogen Safety Management Act" (Hydrogen Economy Act) passing on 5 February, the world's first hydrogen law. The act covers activities in three main areas: hydrogen vehicles, charging stations, and fuel cells.

The law lays the foundations for the "Hydrogen Economy Implementation Roadmap" announced by MOTIE in January 2019. The roadmap, included in the national energy policy - also known as the Third Basic Energy Plan - seeks to support the country's efforts in developing hydrogen as a clean energy source, in line with its ambition of becoming carbon neutral by 2050, said Vince Heo, associate director at IHS Markit in Seoul.

"The roadmap aims to make hydrogen more competitive in the power, transport, as well as residential and commercial sectors. The Moon administration has been pushing for a hydrogen economy owing to its environmental benefits in mitigating carbon emissions and fine dust, and potential synergy with [the] energy and automotive industries," he said.

SK Group

Following the promulgation of the law in February, South Korea's third-largest conglomerate or chaebol, SK Group, announced plans to invest 18.5 trillion won ($1.65 billion) over the next five years to develop a domestic hydrogen industry. It said the full value chain encompassing production, distribution, and the sale of hydrogen will create more than 200,000 jobs.

SK Group plans to complete construction of a hydrogen liquefaction plant, which it claimed will be the world's largest, by 2023 and supply 280,000 mt/year of hydrogen made from liquefied natural gas by 2025, the company said in a statement 30 March.

The plan involves two stages. SK E&S, which is leading SK Group's hydrogen efforts, will invest about 500 billion won (about $446 million) in a hydrogen liquefaction plant that will supply 30,000 mt/year of liquefied hydrogen by 2023. The second stage will involve the production of an additional 250,000 mt/year of carbon-free green hydrogen by 2025. The plant will be built on a site within the SK Incheon Petrochemical Complex in the Incheon district in Seoul.

That initial annual total of 30,000 mt of liquefied hydrogen is equivalent to 75,000 units of Nexo, the quantity of fuel needed for hydrogen-fueled cars to travel about 46,520 km, and has the same effect as planting 12 million trees to reduce carbon dioxide, SK Group said.

"SK will accelerate the process of building a hydrogen eco-system in Korea to contribute to achieving carbon neutrality," said Chey Tae-won, SK Group chairman.

The company also plans to enter other Asian markets, including China and Vietnam, he said.


South Korea's leading steel maker POSCO has also climbed aboard the hydrogen bandwagon after unveiling a plan last December to build hydrogen production capacity of 5 million mt/year by 2050.

"POSCO will work on producing and supplying hydrogen, a major clean energy of the future. We will contribute to enhancing the national hydrogen ecosystem towards carbon neutrality," CEO Jeong-Woo Choi said when the plan was unveiled.

POSCO set up a business division in January to oversee the construction of hydrogen stations in the areas where steel production is carried out, and swap out its vehicles for hydrogen-powered replacements, it said in a statement 18 December 2020.

The company intends to boost its production capacity of by-product hydrogen to 70,000 mt/year by 2025. It also plans to produce up to 500,000 mt of blue hydrogen (where the emissions are captured) by 2030 in partnership with non-South Korean companies, and set up production facilities capable of producing 2 million mt/year of green hydrogen by 2040 and up to 5 million mt/year by 2050.

South Korea's annual domestic demand for hydrogen is expected to increase to 1.94 million mt in 2030 and more than 5.26 million mt in 2040, according to POSCO estimates.

Global partnerships

The five conglomerates aren't going it alone though, announcing a flurry of collaborations with global players in developing hydrogen projects in South Korea.

SK Group has partnered separately with Plug Power and Bloom Energy, Hyosung has teamed up with Linde, Doosan Heavy Industries with Air Liquide Engineering and Construction, and Hyundai is working with INEOS.

SK Group invested $1.6 billion in Plug Power, a hydrogen fuel cell and e-mobility enabling fuel solutions provider, to accelerate hydrogen as an alternative energy source in Asian markets, according to a 25 February statement.

Hyosung announced on 4 February that it was partnering with Linde to develop a 30 mt/day liquid hydrogen facility in Ulsan.

The Hyundai-INEOS collaboration, announced on 22 November 2020, will entail the production and supply of hydrogen as well as the worldwide deployment of hydrogen applications and technologies.

Doosan Heavy Industries signed an agreement with Air Liquide Engineering & Construction in November 2020 to support the construction of a liquid hydrogen plant in Changwon city, South Korea.

Law to ease regulatory hurdles

The Hydrogen Economy Act is expected to ease regulatory hurdles in installing new fueling stations, according to Heo. The installation of new fueling stations often encounters opposition from local government and communities due to safety concerns. There are currently 34 hydrogen fueling stations in South Korea, making it the fourth-largest market after Japan, Germany, and the US, according to IHS Markit data.

According to the Hydrogen Economy Implementation Roadmap, the government aims to install 310 stations serving 67,000 fuel cell electric vehicles (FCEVs) by 2022, and 1,200 stations serving 2.9 million FCEVs by 2040. The roadmap also outlines investment in and construction of three hydrogen cities by 2022, with a further three cities to be added by 2025, Heo said.

The South Korean government has also set up a Hydrogen Economy Committee that will oversee hydrogen initiatives and report directly to the prime minister, as well as the Green New Deal policy in 2020, as part of the country's path to a hydrogen economy.


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