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By Kim Sung-woo
Among the various elements discovered by humans so far, hydrogen is known as the element that is the most abundant, lightest and simplest in structure. Water, which covers more than 70 percent of the earth, is made up of hydrogen and oxygen. An important property that is missing in hydrogen's profile is that hydrogen has the strong potential to become a key source of our next-generation clean energy, which is essential to cope with the climate crisis.
Carbon, in contrast, could be fatal even in small amounts. Ninety-nine percent of the earth's atmosphere is comprised of oxygen and nitrogen. Carbon dioxide (CO2) takes up only 0.03 percent. The CO2 concentration, which had been rising and falling between 0.02 percent and 0.03 percent over the past 800,000 years, has risen above 0.04 percent for the first time since the 18th century industrial revolution era, due to a rapid increase in fossil fuel use and deforestation. Since then, the CO2 concentration has been at a record high in the earth's history every single year.
Even the 0.01-percent increase in the CO2 concentration pushed up the average temperature of the earth by more than 1 degree Celsius and is expected to continue the trend for the time being. The 800,000-year, long-standing balance in the circulation of carbon in the air, water and soil on the earth was destroyed, putting the sustainability of the planet in jeopardy.
This is why we are striving to sunset carbon and introduce more hydrogen, which can replace carbon in various uses. For example, when the supply in renewable energy such as solar and wind power exceeds demand due to fluctuations in weather conditions, hydrogen can be used to convert the excess renewable energy into a form of energy that can be stored for later use.
Hydrogen can be also used for vehicles in urban areas where multi-unit housing is dominant with few individual garages, and for large vehicles, ships and aircraft that require batteries of a significant size. Hydrogen is also an essential ingredient for industrial processes that require high temperatures or are difficult to electrify. In light of these various uses, some predict that the hydrogen market will reach $2.5 trillion in size by 2050.
Just in time, we now have a blueprint to foster a hydrogen industry in Korea. On Nov. 9, the Hydrogen Economy Committee formed by various government ministers had its first meeting since the inauguration of the Yoon Suk-yeol administration.
The committee deliberated and passed three agenda items: (1) a plan to create a clean hydrogen ecosystem, (2) a strategy to foster the world's No. 1 hydrogen industry, and (3) a strategy for future hydrogen technology. In particular, the plan to create a clean hydrogen ecosystem was presented as an agenda task to prepare for the accelerating competition in clean hydrogen amidst the ongoing global energy crisis.
The plan has four major focuses: creating large-scale demand for hydrogen, establishing a demand-based distribution infrastructure, establishing a supply chain for clean hydrogen at home and abroad, and establishing a policy and regulatory framework for the hydrogen market. Initial targets include supplying 30,000 hydrogen commercial vehicles, securing 70 liquefied hydrogen charging stations by 2030, and achieving 7.1 percent of total power generation using clean hydrogen by 2036.
Relevant laws are also set to take effect from Dec. 11. After enacting the "Act on Promotion of Hydrogen Economy and Safe Management of Hydrogen" (the "Hydrogen Act") in 2020, Korea's National Assembly amended the Hydrogen Act in June 2022 to introduce the clean hydrogen certification system, mandatory sales and the use of clean hydrogen, and mandatory purchase and the supply of power generated by hydrogen, i.e., electricity generated by hydrogen.
Among them, the government plans to drive the demand for hydrogen by enforcing the mandatory purchase and supply of hydrogen-generated electricity and by creating trading markets. To this end, the Ministry of Trade, Industry and Energy announced proposed legislation in August and November 2022 to amend the subordinate regulations of the Hydrogen Act to set forth further details on the mandatory purchase and supply of hydrogen-generated electricity.
In the mid to long term, the series of legislative movements ― enactment of the Hydrogen Act and amendment of its subordinate regulations ― aims to promote the advancement of, and investment in, clean hydrogen production technology. In the short term, they aim to create demand for hydrogen-generated power and hydrogen itself as an ingredient for such power generation.
Companies are also moving fast to transition to the hydrogen economy. Reportedly, as of last May, it was estimated that 10 major Korean companies combined, including SK, POSCO, GS and Hyundai Motor Company, will have poured more than 160 trillion won ($121.2 billion) in eco-friendly investments over the next three to five years, with most companies planning to invest in hydrogen in various ways, including hydrogen production and power generation.
Last July, the Korea H2 Business Summit, formed by the CEOs of 17 major Korean companies, held an "Investor Day" to share plans for mutual cooperation and business development. The summit participants also decided to create a hydrogen fund.
Uncertainty may be the biggest obstacle to any entrepreneurship. Hopefully, the new policy initiatives and regulations taking effect can remove some of the uncertainties in the ever-changing business environment and could be a driving force for boosting investment in hydrogen for many pioneering entrepreneurs and CEOs.
Kim Sung-woo is head of the Environment & Energy Research Institute at Kim & Chang.
