Hydrogen Economy Pretend?..."Budget Increased 10 Times in 4 Years... Will Continue Active Support"

Government Officially Refutes Criticism Saying Hydrogen 'National Strategic Technology' Designation Failure Shows "Different Inside and Out"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bong-su] Although the government has not designated hydrogen as a national strategic technology, it is currently sparing no budget or tax support and has announced that it will continue to make full-scale investments in the future.

In this regard, it is known that the Ministry of Trade, Industry and Energy and the Ministry of Economy and Finance recently discussed designating hydrogen as a national strategic technology, but the plan was scrapped. If selected as a national strategic technology, companies would be able to receive tax credits for research and development (R&D) or facility investment costs at the highest legal level. The Ministry of Trade, Industry and Energy reportedly proposed this, stating that stronger incentives for companies are necessary to achieve the first basic plan for hydrogen economy implementation. However, the Ministry of Economy and Finance opposed the idea, saying it is not an industry heavily affected by the global supply chain restructuring, and thus it was ultimately excluded. This led to criticism from some quarters that the government "promises full support on the surface but is actually stingy."

In response, the Ministry of Science and ICT, the Ministry of Trade, Industry and Energy, and the Ministry of Economy and Finance jointly issued a statement late in the evening on the 2nd, rebutting that "we are sparing no active support and will make more investments in the future."

In the 'Government Position' document, the three ministries pointed out, "While major countries around the world are fiercely competing to dominate the hydrogen economy, Korea is proactively pursuing policies such as the Hydrogen Economy Activation Roadmap (January 2019), the world's first Hydrogen Act enactment (February 2020), and the establishment of statutory plans related to hydrogen (November 2021)." They added, "As a result, Korea has repeatedly achieved the world's best growth in hydrogen vehicles and fuel cell sectors, currently ranking first in the world, producing tangible outcomes."

They emphasized that the government's full-scale financial and tax support has played a catalytic role in achieving these results. In fact, the hydrogen-related budget has dramatically increased more than tenfold from 74.8 billion KRW in 2017 to 845.4 billion KRW this year over four years. Next year, based on the government proposal, it is expected to reach about 1.3 trillion KRW, approximately 17 times the 2017 level and more than 50% higher than this year. Tax support also applies preferential credit rates for R&D tax credits and integrated investment tax credits by designating key technologies in the hydrogen industry related to hydrogen fuel cells, hydrogen vehicles, and liquefied hydrogen production as new growth and original technologies. Accordingly, small and medium enterprises receive 30-40%, and medium and large enterprises receive 20-30% tax credits for hydrogen R&D expenses. For facility investments, large, medium, and small enterprises receive basic credits of 3%, 5%, and 12%, respectively, plus an additional 3% credit for increased investment.

The three ministries stated, "To actively support the hydrogen economy implementation going forward, we plan to additionally designate core technologies at each stage of the hydrogen industry, including hydrogen production, distribution, and utilization, as new growth and original technologies, and reflect this in the revision of the Enforcement Decree of the Restriction of Special Taxation Act in January next year." They added, "We also plan to promptly establish an institutional foundation for creating a clean hydrogen ecosystem and actively promote amendments to the Hydrogen Act to introduce a clean hydrogen certification system and a clean hydrogen mandatory power generation system, which are key foundations for revitalizing clean hydrogen."

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