Dilshod was supported in writing this article by Chris Lee from our US operation.
In 2022, more than half of fuel cell electric vehicles (FCEVs) sold globally were made in South Korea, and Hyundai solidified its spot as the world's top FCEV OEM, growing its market share to almost 60%. The country also boasted nearly half of the world’s installed capacity of utility-scale stationary fuel cells.
But it's not all good news for Korea. One of the key advantages of FCEVs – the ability to refuel within minutes – is being severely compromised by insufficient supplies of hydrogen at refuelling stations. Once hydrogen has run out, drivers must wait hours for more hydrogen to be delivered and re-compressed. And to make matters worse, only one dispenser per station is allowed due to strict gas safety regulations.
These issues raise concerns that the Korean hydrogen economy has been rolled out too quickly. But they also present significant opportunities for international tech companies which can offer solutions to the problem.
Why hydrogen? Why now?
According to the European Commission’s EDGAR (Emissions Database for Global Atmospheric Research) database, Korea was the world’s ninth most prolific greenhouse gas emitter in 2022 – a sobering reminder of the country’s environmental problems.
As Asia’s fourth largest economy and with manufacturing at its core, Korea relies heavily on a stable electricity supply to fuel its industries. However, due to several factors including geographical constraints and the intermittent nature of renewable energy, electricity sources such as solar and wind power are not economically viable options in the region.
In addition, despite being home to some of the world's top energy storage system (ESS) manufacturers such as Samsung SDI and LG Energy Solutions, only 10% of the country’s solar and wind power stations are equipped with ESS. This low adoption rate is due to the high capital expenditure needed for renewable energy projects and Korea’s strict regulations for ESS emergency shutdown and troubleshooting systems, aimed at preventing the impact of fire and natural disasters.
In response to these challenges, Korea has turned decisively to hydrogen to meet its energy demands – with widescale deployment of hydrogen-powered vehicles and utility-scale fuel cell power plants across the nation.
From 2020 to 2022, Korea’s hydrogen strategy was primarily driven by ambitions for economic growth and industrial competitiveness, with environmental concerns further down the list. This was evident in the low emphasis placed on the carbon intensity of hydrogen generated, which was mainly sourced as a by-product of petrochemical complexes and reformed methane.
But the nation has since changed its priorities and, with sustainable energy now high on its agenda, it is also embracing hydrogen to reduce its dependence on fossil fuels and curb its greenhouse gas emissions.
Doubling in size
Korea’s hydrogen industry, in fact, is forecast more than to double in size from KRW 11 trillion ($8.2 billion) in 2021 to KRW 26.8 trillion ($20.2 billion) by 2030. This will be driven by investments from large Korean players as well as government initiatives, as hydrogen is seen as a key growth engine and a strategic energy carrier.
And the hydrogen economy isn't just a distant concept – it's already a reality in Korea. On the streets of Seoul, Busan, Daegu and other big cities, hydrogen cars and buses are now a common sight.
It’s easy and enjoyable to go to meetings by hopping into quiet, comfortable, emission-free hydrogen taxis – which charge the same fare as traditional taxis – and to catch hydrogen buses for your daily commute.
Additionally, generous government subsidies covering more than half the purchase price of FCEVs have made them highly appealing, contributing to almost 200% annual sales growth at its peak in 2021.
Point of no return
At the government-led Hydrogen Economy Committee meeting in Seoul in January, Prime Minister Han Duck-soo said, in response to a question about the country’s ambitious hydrogen goals, that, “with a vast amount of investment already in clean hydrogen production and the roll-out of FCEVs,” Korea is past the point of no return.
The government's staunch support for the hydrogen industry has also been echoed by the private sector, with major recent financial pledges.
Last year, SK Group announced an investment of $12 billion, Hyundai Motor Group $7.2 billion and POSCO $6.5 billion to develop hydrogen production, transportation and storage technologies by 2030. Other major players such as Doosan (power generation), Hyosung (liquid hydrogen) and Hanwha (hydrogen production and materials) are also making billion-dollar commitments, creating a competitive and innovative hydrogen ecosystem in Korea.
Victim of success
But while the rapid rollout of hydrogen vehicles and the increasing number of utility-scale fuel cell power plants are impressive, Korea’s big problem is that these have far outpaced the capacity of its hydrogen refuelling infrastructure and production facilities.
There’s a pressing need to bolster these capabilities and, to help address this challenge, the Korean government is supporting both upstream and downstream hydrogen industries through strategic projects, investments and deregulation.
And, along with private sector demand, this is presenting a trove of opportunities for international tech firms to bring their expertise and technologies to a burgeoning hydrogen economy eager for innovation and collaboration to address its deficiencies.
Innovations in production
One major area where Korea needs overseas input is hydrogen production.
The country’s current hydrogen supply is predominantly grey, meaning it’s derived from fossil fuels by reforming natural gas, which emits CO2. Only a small fraction is green hydrogen, obtained by splitting water into hydrogen and oxygen using renewable-powered electrolysis in a carbon-neutral process. The nation’s ability to increase this is hampered by its limited renewable energy resources, and this clearly stands in conflict with its commitment to be more sustainable.
Overseas technology can make a significant beneficial impact here, as demonstrated by the recent deal we helped our US client, Utility Global, strike with Korean industrial giant Hanwha to produce hydrogen in Korea from biogas.
Advancements in electrolysis technology could also be a linchpin for Korea’s green hydrogen ambitions. The collaboration between Korea’s SK E&S and US firm Plug Power exemplifies the potential for partnership through their joint efforts to develop state-of-the-art polymer electrolyte membrane (PEM) water electrolysis tech.
Similarly, the alliance between US company Bloom Energy and Korea’s SK ecoplant uses Bloom’s solid oxide electrolyser cell (SOEC) technology, highlighting the efficiency and scalability of western innovation in green hydrogen production.
Given Korea’s geographical limitations, the country is also keenly exploring hydrogen imports, which underscores the importance of overseas technologies in areas such as maritime safety, storage solutions, liquid hydrogen handling, leak detection and regasification.
And international ventures like the World Energy GH2 project in Canada, in which SK ecoplant has a significant stake, highlight the global scope of Korea's hydrogen strategy and the openings for international expertise to contribute meaningfully to the country’s green hydrogen story.
Additionally, in our recent engagements with the innovation teams at major Korean industrial firms – including Kolon Industries, Hyundai E&C, SK E&S and POSCO – the topic of carbon capture, utilisation and storage (CCUS) has been a recurrent theme, highlighting its pivotal role in Korea's hydrogen economy. This is particularly the case in the production of blue hydrogen (where CO2 emissions are captured for storage or utilisation) and turquoise hydrogen (which uses methane pyrolysis and generates reusable solid carbon instead of CO2).
International companies with advanced CCUS technologies will find a highly receptive market in Korea, as demonstrated by Korean company GS Caltex's collaboration with several overseas businesses for carbon management initiatives.
The partnership between Korea’s Innovative System Technology (ISTE) and British firm Levidian Nanosystems also highlights the potential for western technology to aid the production of turquoise hydrogen and secondary battery materials.
Infrastructure advancements
Alongside hydrogen production, lack of infrastructure is the other significant hurdle to a well-functioning hydrogen economy in Korea: the country faces an urgent need for more hydrogen refueling stations (HRS) as well as efficient transportation and storage.
International technology can play a pivotal role here by offering advanced transportation technologies including better compressors, innovative storage solutions and alternative hydrogen carriers such as ammonia and ethanol.
The memorandum of understanding between South Korea's Hanyang Corporation and US company Air Products & Chemicals to develop green ammonia and hydrogen infrastructure in Yeosu is a testament to the importance of cross-continental partnerships in this arena.
Such collaborations aim to establish robust infrastructure that can manage and scale the hydrogen supply chain, reinforcing Korea's position as an industry leader.
A symbiotic future
The symbiotic relationship between South Korea's burgeoning hydrogen market and international technology firms, then, presents vast commercial potential.
For businesses looking to expand in Asia, Korea's hydrogen market is not only a land of opportunity but a canvas for meaningful collaboration.
By addressing Korea's pain points, advanced tech providers can help propel the nation towards a sustainable and prosperous energy future, while establishing a strong foothold in a fast-growing economy that truly values innovation and forward-thinking partnerships.
To discuss your prospects in Asia’s hydrogen market, contact Oren Bernstein at oren.bernstein@intralinkgroup.com.
Dilshod was supported in developing this article by Chris Lee, from our Silicon Valley office, who helps North American cleantech and hydrogen companies expand in overseas markets. Fluent in English and Korean, he holds a BSc in Petroleum Engineering and, with a keen eye for emerging energy trends, he’s secured four major hydrogen industry expansion projects in Asia in the last two years.
Prior to Intralink, Chris honed his insights in ExxonMobil’s petrochemical research team, and his experience in the traditional and renewable energy sectors positions him well to connect businesses with the dynamic opportunities in Asia.