[Hydrogen Korea] Korea sets out to seize lead in hydrogen energy
With Hyundai at global forefront, Seoul’s W2.6tr plan on hydrogen ecosystem ups hopes for energy transition, but market remains uncertain
Published : Aug 5, 2018 - 15:17
Updated : Aug 13, 2018 - 17:55
After a decade of dragging its feet, the South Korean government has come up with a set of measures to nurture an ecosystem for hydrogen vehicles, seeking a transition from fossil fuels to zero emission energy.
For more than a decade, the state drive for a hydrogen economy has been sidelined, due to policy inconsistencies through different administrations and a global preference for batteries over fuel cells.
Amid problems of energy intermittency being addressed over renewables, however, interest in the potential role of hydrogen in South Korea’s de-carbonization has grown.
In June, the Ministry of Industry, Trade and Energy announced a 2.6 trillion won plan to supply 16,000 hydrogen-powered vehicles and build 310 hydrogen refilling stations across the country. Under the five-year plan, businesses are expected to get state support for the development of fuel cell stacks and fuel cell storage containers, as well as tax breaks for hydrogen vehicle drivers.
Park Jong-won, of the automobiles and aviation department of the Ministry of Industry, sees hydrogen and battery-powered vehicles (EVs) as complementary, not rivals.
Although there are only 170 hydrogen powered vehicles currently registered here, he expects that to reach 15,000 by 2022 –the same order of magnitude as the current number of EVs.
For EVs, which now have a head-start on hydrogen, the ministry also expects the number registered in South Korea to grow, from 25,500 to 350,000 over the same period.
“The technology of electric vehicles has become widely available now, but that of hydrogen cars are still in an infant stage and there should be more basic infrastructure like refilling stations (to buttress its growth),” he said.
Both hydrogen and battery-powered vehicles are electrically driven and have no carbon emissions -- qualities sought after by most advanced economies to minimize the use of gas or diesel in order to curb pollutants. Hybrids and plug in hybrids are also considered eco-friendly, using electric power to reduce the emissions from their regular diesel or gasoline engines.
The difference between hydrogen cars and EVs is that the latter are charged with electricity externally, while hydrogen powered cars generate energy by converting the chemical energy of hydrogen by reacting hydrogen with oxygen in a fuel cell. Aside from the difference in where the electricity comes from, the charging time for hydrogen vehicles is shorter than that of EVs, while a single charge gives a longer driving distance.
There are only a handful of commercial hydrogen vehicles in the market that include the world’s first Hyundai Tucson ix35 FCEV along with the Toyota Mirai and the Honda Clarity. Hyundai has also recently unveiled the newest flagship Nexo this year.
“Currently, South Korea is one of the leading countries in fuel cell electric vehicle (FCEV) technology which is yet taking a small portion both in domestic and global market,” said Ryan Lee, principal analyst at IHS Markit.
“However, the investment will accelerate popularizing FCEVs with more realistic numbers of charging infrastructure (only 11 FC charging stations in Korea currently) and sufficient subsidy support,” he said.
But the South Korean government’s focus appears to be limited to auto industry and is far from comprehensive, experts say.
In a hydrogen economy, vehicles would play a crucial part. But more comprehensive work has to be carried out -- such as building nationwide networks of energy supply and storage system, which cost a lot of money and require a high level of technology.
Japan has also been active in hydrogen.
By 2020, the year the country hosts the Tokyo Olympics, Japan plans to increase the number of hydrogen-powered vehicles by 40,000 units and 800,000 units by 2030. Under its 2014 road map toward a hydrogen economy, not only carmakers that have already succeeded in commercial production of fuel-cell electric vehicles, but also other traditional industrial players -- energy firms, steelmakers and shipbuilders -- have formed an alliance to switch to hydrogen energy.
Japan has currently 97 hydrogen filling stations across the country. The number is set to grow to 160 by 2020 and 900 by 2030. Under its grand plan, Japan will build massive electrolysis plants in Australia and the Middle East, and transport them back to Japan on vessels designed to store and carry hydrogen.
Germany has also set a long-term project in 2007 to take the lead in fuel cell technology, while participating in a joint project by EU-member countries aimed at testing efficiencies of hydrogen-powered vehicles and pushing for the commercialization of the green cars. By 2023, Germany plans to operate 650,000 fuel cell electric vehicles and 1.8 million by 2030.
South Korea had also set a master plan in 2005 aimed at increasing the portion of hydrogen-based energy to 15 percent.
Since the late 90s, the government has supported R&D projects initiated by the local carmaker Hyundai to develop hydrogen-powered cars. President Roh Moo-hyun was an ardent hydrogen supporter, according to sources, citing an exchange between him and Hyundai Motor Chairman Chung Mong-koo when the former was in power. Roh reportedly had told the corporate mogul that he would “fully support” the carmaker’s hydrogen project, after taking a ride on a fuel cell vehicle prototype back then.
The power transfer from the liberal to the conservative government led by former President Lee Myung-bak in 2007, however, brought a dark age for hydrogen projects, an industry insider who declined to be named. Instead, Lee promoted the nation’s strength in nuclear energy, curbing the state drive toward hydrogen. Lee himself played a crucial part in signing $40 billion nuclear deal with UAE.
Also, the political shift in US from the Bush administration to Obama was a setback for Korea’s hydrogen drive, said Cho Sang-min, head of new energy development team at Korea Energy Economics Institute.
“President Bush paid keen interest in hydrogen energy, but Obama didn’t. After he took office, the market interest in hydrogen also simmered down, deeply affecting policymakers in South Korea,” he said.
As the government turned a cold shoulder to hydrogen power, projects at small and medium-sized companies died, but some projects pushed by wealthy conglomerates survived.
To take a lead in the uncharted market of hydrogen vehicles, Hyundai spent more than 20 years and succeeded in developing the world’s first fuel cell electric car, the Tucson ix35. Posco and Doosan both invested in fuel-cell production, but reports say that Posco's energy arm is considering shutting down its fuel-cell business.
Along with inconsistent government policies, the absence of hydrogen-related law, safety concerns and lack of public awareness add to uncertainty over whether the hydrogen business can turn profitable, experts noted.
And there is another fundamental issue that needs addressing: Where will the hydrogen come from?
Even though local petrochemical plants produce a considerable amount of hydrogen, it is mostly used as a desulfurizing agent to generate high-value added petroleum products, and none of them has plans to supply them as a new energy source. Gas companies are reportedly reviewing the economic feasibility of investing in hydrogen production, but they are still reluctant.
“It is difficult for Korean companies to invest in a sector that has no infrastructure to begin with. The government needs to ensure them that it is a new market to be created,” an industry insider declined to be named.
Despite the 2.6 trillion won plan, the government feels pressure to go on with hydrogen due to its complexity.
“Energy transition from fossil fuels to hydrogen is more complex, more than many would think,” Ahn Kook-young, chairman of the Korean Hydrogen and New Energy Society, stressing that the transition is equivalent of the introduction of the internal combustion engine in the 19th century’s.
“Building hydrogen infrastructure will take years of effort, money and political consideration,” he said. It cost around 3 billion won to build a hydrogen refilling station, compared to 200 million won for a gasoline station, he added.
Still, South Korea keeping its hydrogen dream has a point.
“The government is determined to complete its goal on climate change to comply with the global consensus on reducing emission.”
The Moon Jae-in administration’s nuclear phase-out policy in October was widely expected to include some support for hydrogen power. But last year, hydrogen was not mentioned when President Moon vowed to slowly end nuclear power.
For businesses, particularly conventional ones facing pressures to cut down CO2 emissions, a transition to a hydrogen economy could secure their survival.
“To keep its hegemony in the market, carmakers will continue to develop (hydrogen technology). So too, the government, (will push the drive) to keep jobs (in the traditional industries),” said Im Eun-young, an analyst at Samsung Securities and Investment.
By Cho Chung-un and Shin Ji-hye
Aug 13, 2018