Chairman Chey Tae-won: "SK Makes Major Breakthrough in Hydrogen Production"... Aiming for Global No.1 in Hydrogen Business by 2025

18.5 Trillion KRW Investment in Hydrogen Ecosystem Creation
Goal to Establish 280,000 Tons Annual Supply System by 2025
Proposing Integrated Operation Model for Hydrogen Production-Distribution-Supply Value Chain

[Asia Economy Reporter Hwang Yoon-joo] Chey Tae-won, Chairman of SK Group, who emphasized the 'Financial Story,' has reinforced the hydrogen ecosystem strategy of SK Inc. and SK E&S, aiming to become the world's largest hydrogen production base.

On the 8th, Chairman Chey attended the 'Korea H2 Business Summit' held at KINTEX in Goyang-si, Gyeonggi-do, and highlighted SK Group's strength in the hydrogen business by stating, "The biggest milestone is producing hydrogen."

This is interpreted as emphasizing SK's hydrogen production strategy to transform energy centered on crude oil such as gasoline into eco-friendly hydrogen. SK previously announced plans to invest 18.5 trillion KRW to build the world's largest liquefied hydrogen plant and clean hydrogen production facilities by 2025. Through this, SK aims to solidify its position as the only domestic operator that integrates and operates the entire hydrogen value chain?from production to distribution and supply.

SK Inc.'s hydrogen business promotion strategy can be summarized into three main points: ▲Entering the domestic hydrogen market by establishing a large-scale hydrogen production system utilizing group infrastructure ▲Securing business stability through integrated operation of the value chain from hydrogen production, distribution, to supply ▲Targeting the global market through investments in technology companies and partnerships to secure core hydrogen technologies.

Phase 1 of the Hydrogen Ecosystem… Construction of SK E&S Liquefied Hydrogen Production Base

SK plans to actively utilize the infrastructure owned by the group to supply competitive hydrogen.

SK's domestic hydrogen ecosystem creation strategy proceeds in two main phases. First, in phase 1, SK E&S will invest about 500 billion KRW to build a liquefied hydrogen production base to achieve an annual production capacity of 30,000 tons of liquefied hydrogen.

SK E&S has purchased approximately 13,000 pyeong of land within the SK Incheon Petrochemical Complex in Wonchang-dong, Seo-gu, Incheon, and plans to complete a hydrogen liquefaction plant with an annual capacity of 30,000 tons by 2023. By processing hydrogen into liquid form through the liquefaction plant, inefficiencies occurring during transportation and charging of hydrogen in gaseous form can be improved, and safety can be significantly enhanced. To this end, SK E&S will receive by-product hydrogen supply from SK Innovation.

In particular, SK Incheon Petrochemical, a subsidiary of SK Innovation, is located near the metropolitan area, the largest hydrogen energy demand area, and is evaluated as an optimal site that can efficiently solve cost issues related to long-distance hydrogen transportation.

The 30,000 tons of liquefied hydrogen produced in phase 1 is equivalent to the amount needed for 75,000 hydrogen passenger cars, such as Nexo, to simultaneously circle the Earth (approximately 46,520 km), and it is expected to greatly contribute to environmental aspects such as improving air quality in the metropolitan area, with a carbon reduction effect equivalent to planting 12 million trees.

Phase 2 of the Hydrogen Ecosystem… Operation of Large-Scale 'Blue Hydrogen' Production System Exceeding 3 Million Tons Annually

In phase 2, SK aims to operate a large-scale eco-friendly 'Blue Hydrogen' production system starting in 2025. SK E&S, the largest private LNG operator in Korea importing over 3 million tons of LNG annually, plans to produce an additional 250,000 tons of clean hydrogen by removing carbon dioxide near the Boryeong LNG terminal using the large volume of natural gas secured by SK E&S.

In the long term, SK plans to actively promote 'Green Hydrogen' production businesses using renewable energy such as solar and wind power to complete a large-scale supply system of eco-friendly hydrogen that emits no carbon dioxide.

With the additional 250,000 tons produced in phase 2, SK will establish itself as the world's number one eco-friendly hydrogen company producing and supplying a total of 280,000 tons of eco-friendly hydrogen annually in Korea alone. SK plans to leverage this business experience and capability to actively promote hydrogen businesses in Asian markets such as China and Vietnam.

SK Leaps to the World's No. 1 Hydrogen Business Operator through the Hydrogen Value Chain

SK plans to strengthen business stability by integrating and operating the hydrogen value chain from production to distribution and supply.

The global hydrogen market, including Korea, is still considered to be in its early stages. In particular, the domestic hydrogen market faces difficulties in expanding hydrogen vehicle adoption due to a lack of transportation and charging infrastructure, and existing hydrogen operators are caught in a vicious cycle of not actively investing in production facilities due to insufficient demand.

SK has experience and know-how in leading the energy ecosystem through value chain integration in existing energy businesses such as oil and natural gas (LNG), and plans to actively utilize these capabilities to quickly establish a virtuous cycle structure in the domestic hydrogen ecosystem covering production, distribution, and supply.

According to announcements by domestic companies, SK is the only one to have disclosed detailed plans for independently integrating and operating the hydrogen value chain. SK plans to establish a production capacity of 280,000 tons by 2025, utilize SK Energy's gas stations and truck rest areas as green energy service hubs to supply hydrogen for vehicles, and actively develop large-scale power generation demand such as fuel cell power plants.

SK is also considering expanding hydrogen applications to drones and other areas where demand is gradually increasing, such as work vehicles and industrial sites.

SK Inc. is simultaneously targeting the global hydrogen market by securing core hydrogen technologies. To this end, SK is securing global hydrogen business competitiveness early through investments in overseas companies possessing fundamental hydrogen technologies and forming global partnerships, and plans to actively enter Asian markets such as China and Vietnam based on this foundation.

Earlier this year, SK Inc. secured a majority stake in Plug Power, a global leader in the hydrogen market, and recently invested in Monolith, the first company in the world to establish a turquoise hydrogen production system in the U.S., rapidly securing various clean hydrogen production options and core technologies.

SK expects that the launch of the Korea H2 Business Summit will reaffirm its ESG management policy and simultaneously achieve optimal economic value. Through the full-scale domestic hydrogen business promotion and proactive entry into the global market, SK anticipates creating an additional net asset value (NAV) of about 30 trillion KRW at the group level by 2025 through the establishment of the hydrogen ecosystem.

An SK official said, "The launch of the Korea H2 Business Summit will be a good opportunity to confirm each company's commitment to fostering the hydrogen business, which is regarded as the ultimate eco-friendly energy business," adding, "As SK stands at the starting point of a full-scale transition of its investment portfolio to eco-friendly sectors, it will consolidate its accumulated energy business capabilities to create an eco-friendly hydrogen ecosystem and establish itself as a leading ESG management company not only domestically but also in the global market."

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