[Inside Chodong] Perception That the Yoon Administration Won't Pursue Hydrogen Holds Back Progress

"About 5 or 6 years ago, when we tried to get investment by saying we were going into the hydrogen business, the response was that electric vehicles would become the trend rather than hydrogen. Even 2 or 3 years ago, when there was some interest, they advised us to do ammonia business instead, doubting whether liquefied hydrogen would work. Do you know how it is this year? They asked back, saying this government won’t pursue the hydrogen business, so how are you going to manage?"

A small business owner who recently attended a hydrogen seminar expressed the difficulties of management. He has been dedicated to the liquefied hydrogen business for over 10 years, but he described his company as still a startup. Although he entered the hydrogen business early, seeing its growth potential, he lamented that it takes too long for domestic perception of hydrogen to change.

So, he said he explains to investors the policies of the U.S. and Europe and the hydrogen projects being promoted there instead. He urged them to look overseas rather than domestically. He emphasized, "When you look at the hydrogen business in the U.S. and Europe, it feels like it’s progressing at the speed of light," and added, "It’s really different from us in that they don’t engage in political debates when changing the energy paradigm."

There remains skepticism about whether the hydrogen industry, regarded as a clean energy source in the carbon-neutral era, can fully bloom in South Korea. We were the first in the world to mass-produce hydrogen vehicles, planting the seeds of the hydrogen industry. Soon, we will produce liquefied hydrogen and start co-firing power generation, marking the budding of its flowering.

However, most hydrogen companies agree that there is still a long way to go before the hydrogen industry can flourish in South Korea. When asked to point out the most lacking part, they unanimously answer policy. Simply put, they cannot have confidence in the country’s policies.

Without confidence, decisions are delayed, even though others are moving forward. In June, POSCO Holdings secured exclusive development rights for a green hydrogen project in Oman. The project involves building a renewable energy complex with solar and wind power in the Duqum area of Al Wusta Governorate, about 450 km southwest of Muscat, the capital of Oman, and producing hydrogen with the electricity generated there to import it to Korea. POSCO urgently needs to secure large amounts of hydrogen to replace coal, a key raw material, to reduce carbon emissions in the steelmaking process.

POSCO developed this business model in 2021. At that time, the Omani government, actively seeking foreign investment, offered POSCO the project rights through a sole-source contract. However, POSCO could not decide on the investment for over half a year.

Meanwhile, a presidential election was held in South Korea, and the administration changed. Since it was unclear how government policies would change, they wasted a lot of time discussing how to manage investment risks. Eventually, the Omani government established a policy to introduce competitive bidding at the end of last year, and POSCO only won the project rights in June this year. They had to pay a higher price than at the beginning of the project.

Global major companies that reviewed the same project around the same time signed sole-source contracts with the Omani government ahead of POSCO. They made quick decisions and secured project rights in better locations without competition. An industry insider said, "Government policy direction is a lever that leads companies’ investment decisions," and expressed regret, "If the government had shown policy consistency to companies, decisions could have been made much faster."

Government support for hydrogen is retreating. According to a recent Korea International Trade Association survey, among 10 regions targeted for hydrogen production infrastructure projects, budget execution rates in 5 regions were below 70%, and all project sites were delayed by more than six months from the original plan due to licensing issues. The budget for the carbon-neutral industry core technology development project using hydrogen was cut from 6.5662 trillion won to 935.2 billion won. The budget for hydrogen production base construction projects decreased from 66.6 billion won in 2021 to 8.8 billion won this year.

At the United Nations General Assembly held in New York on the 20th, President Yoon Suk-yeol proposed the international coalition 'CF(Carbon Free)100.' This is a zero-carbon energy system that realistically increases feasibility by including nuclear power and hydrogen, compared to 'RE100,' which uses 100% renewable energy. The president’s words expressing active support for the hydrogen business are welcome, but it must not remain a declaration. What companies want is policy consistency.

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