[Choi Ji-woong's Energy War] Renewable Energy, Between Fantastic Stories and Harsh Numbers

Green Hydrogen Accounts for Less Than 1%
But Tackling Climate Change Is Humanity's Challenge

Science and Technology Draw Attention and Always Deliver Results
It's Too Early to Judge Renewable Energy by Numbers Alone

Starting from the 13th, Asia Economy Newspaper will publish a monthly Thursday column titled 'Choi Ji-woong's Energy War,' diagnosing the energy industry undergoing a great transformation and examining the related changes in the international order. The author is an expert in the energy field who joined Korea National Oil Corporation in 2008, worked in the Europe and Africa Business Division and the Stockpile Business Division, and completed an oil and gas MBA program at Coventry University in London in 2015. He published the bestseller 'How Oil Rules the World,' which covers the modern history of oil. From August to October last year, he gained readers' attention by serializing the column in this newspaper.

"In the business world, there are 'storytellers' who create compelling narratives and 'number crunchers' who build accounts with meaningful numbers and models," says New York University professor Aswath Damodaran in his book , arguing that business value can be maintained when these two are balanced and integrated in judgment. Although this idea seems obvious, the reason his book became a bestseller is likely because it is not easy to achieve.

Few fields find it as difficult to balance narrative and numbers as the energy sector. The representative energy source where these two collide is hydrogen. The story hydrogen offers is fantastic. As the most abundant substance in the universe and producing energy using water, hydrogen provides the best possible narrative for future energy. However, no matter how clean and pure the story is, if it produces less energy compared to existing energy sources, its appeal diminishes. In fact, the numbers hydrogen presents are not yet attractive. Above all, hydrogen production is not easy. Still, hydrogen cannot be dismissed because future value cannot be predicted by today's numbers. This is precisely where the dilemma arises.

Disappointing 'Green Hydrogen' Figures, Difficult to Increase Soon

The most common current method of producing hydrogen is 'hydrocarbon reforming,' and the most ideal method is 'water electrolysis.' Future hydrogen supply must rely on these two methods. Hydrocarbon reforming extracts hydrogen from hydrocarbons such as natural gas and coal. Water electrolysis obtains hydrogen by electrolyzing water. Since electrolysis requires a huge amount of electricity, if electricity generated by thermal power plants is used, greenhouse gases are emitted due to coal combustion.

Therefore, electricity must be generated from renewable energy sources like solar and wind power, and that electricity used to split water to produce hydrogen. Hydrogen produced without carbon emissions during production is called 'green hydrogen.' The arrival of the hydrogen era depends on how quickly and economically green hydrogen can be produced. The problem is that, except for some European countries, there are almost no countries with abundant renewable energy generation capacity sufficient for hydrogen production. Thus, the share of green hydrogen in global hydrogen production is less than 1% of total hydrogen production. This is a disappointing figure. Moreover, this number is unlikely to increase significantly in the near future because expanding renewable energy cannot be achieved quickly.

Renewable energies such as wind and solar power also have disappointing 'numbers.' Bill Gates confesses in his book that he initially thought expanding renewable energy was very important to reduce carbon emissions. However, after realizing the large land area required, he slightly changed his view. He states that producing the same amount of electricity requires 5 to 50 times more land for solar power than coal-fired power, and wind power requires ten times more land than solar power.

Jiwung Choi, Energy Expert (Working at Korea National Oil Corporation Oil Information Center)

Ultimately, expectations are lowered due to the land area numbers required by renewable energy. Since producing all electricity from renewable energy is difficult, he suggested that electricity consumption itself should be partially reduced. If such thoughts arise in the vast United States, it may feel even more challenging in Korea, which has a smaller land area. In the early stages, the numbers for renewable energy are harsh, so developing renewable energy can be a battle against the daunting figures.

◆ Current Narrative Focuses on New Energy Sources

Attention should also be paid to the current narrative emerging in the energy sector. Humanity's interest in renewable energy is at its peak, and talent and capital are flowing in. The number of oil reserves, which were thought to be enough for only 30 to 50 years of extraction decades ago, has been continuously increasing, postponing depletion due to the concentration of huge capital and excellent talent in the oil sector. ExxonMobil, an oil company, maintained the top market capitalization for a long time, and many people devoted themselves to researching and challenging oil. Because oil was a source of wealth and a fountain of gold, humanity did not allow its depletion.

Change is driven by human greed and the direction of money. Therefore, when judging the future of a particular industry, one must see whether talent and capital are flowing into that field. The current narrative is directed toward new energy rather than fossil fuels. The top priority is to replace coal-fired power generation, which emits the most carbon, with other energy sources. Coal-fired power accounts for about 40% of Korea's power generation. If coal is replaced by renewable energy, the share of green hydrogen produced based on it can also change. Since science and technology have always produced remarkable results, renewable energy cannot be judged solely by current numbers.

This content was produced with the assistance of AI translation services.