[Hydrogen Economy, Companies Take the Lead] Korea Is Too Small... SK, POSCO, Lotte, and Korea Zinc Expand Clean Hydrogen Territory Globally

By 2050, 60% Hydrogen Self-Sufficiency Rate with Two-Thirds to Be Imported
Active Overseas Hydrogen Production Projects... "Urgent Need for National Support Measures"

Our government has set hydrogen as a key means to achieve carbon neutrality and aims to secure a clean hydrogen self-sufficiency rate of over 60% by 2050. To this end, it plans to import 230 million tons, which is 82.1% of the total hydrogen supply target of 280 million tons by 2050, from overseas. It is more economical to produce hydrogen resources cheaply overseas, where securing renewable energy such as wind and solar power is advantageous, and bring them into the country. Most countries, including Japan, Germany, and Australia, excluding the United States and China, also pursue a two-track strategy of hydrogen production and import.

Korean companies are also actively building overseas hydrogen supply chains. In June, a consortium of six companies from three countries (Korea, France, Thailand), including POSCO Holdings and Samsung Engineering, secured exclusive rights to develop and produce green hydrogen projects in Oman for the next 47 years. This is the largest exclusive green hydrogen project overseas led by a Korean company. Starting in 2030, they plan to produce 220,000 tons of green hydrogen annually, synthesize it into ammonia, and import it to Korea. Last month, POSCO Holdings signed a letter of intent (LOI) for cooperation on blue ammonia production worth $15.5 billion with Lotte Chemical, Korea Electric Power Corporation, and Saudi Arabia's Aramco. Blue ammonia refers to ammonia made from blue hydrogen, which removes carbon dioxide through carbon capture and storage (CCS) technology.

At the groundbreaking ceremony for the world's largest green hydrogen production facility 'SunHQ' held on the 1st in Townsville, Queensland, Australia, (from left) Scott Stewart, Queensland State Government Minister for Resources, Park Ki-deok, President of Korea Zinc, Daniel Kim, CEO of Arc Energy, Kacy Danana, Vice Chairman of Arc Energy, and Paul McCartney, CIO of the Clean Energy Finance Corporation, are posing for a commemorative photo.
[Photo by Korea Zinc]

Last May, Lotte Chemical announced plans to invest a total of 6 trillion won to produce and supply 1.2 million tons of clean hydrogen by 2030. It signed joint research agreements for clean ammonia (blue and green) production and export projects in the Texas Corpus Christi area with German energy company RWE and Japanese Mitsubishi Corporation, and also signed a business agreement with U.S. Tollgrade for domestic clean ammonia import. In Sarawak, Malaysia, it is conducting a global clean hydrogen and ammonia production project.

Korea Zinc is the first domestic company to directly produce green hydrogen overseas. On the 1st of this month, it broke ground on the green hydrogen production plant ‘SunHQ’ in Australia. The annual green hydrogen production target is 155 tons, the largest scale locally. Pilot production will begin by the end of the first quarter next year. In July, together with Hanwha Impact and SK Gas, it signed a main contract for a Korea-Australia consortium to develop a renewable energy complex in Australia by 2030, produce 280,000 tons of green hydrogen annually, convert it into green ammonia, and import over 1 million tons annually to Korea.

Participants of the global consortium led by POSCO Holdings signing the contract last June. From left to right: Gi-Yeol Lee, Executive Director of Samsung Engineering; Stephan Gobehe, Executive Director of Engie; Fr?d?ric Claux, Head of Engie Asia and Middle East; Salim bin Nasser Al Aufi, Minister of Energy and Minerals of Oman and Chairman of the Hydrom Board; Ju-Ik Cho, Head of Hydrogen Business Team at POSCO Holdings; Young-Jae Lee, Head of Hydrogen Convergence Division at Korea Southern Power; Ki-Yeol Hong, Head of Overseas Business Office at Korea East-West Power; Noppajit Chaivanakup, Executive Director of PTTEP.

Photo by POSCO Holdings

SK Ecoplant will supply electrolyzers for the Canadian green hydrogen ‘New GeoHonic’ project. Upon completion, the project will produce 180,000 tons of green hydrogen and 1.08 million tons of green ammonia annually by 2025. This is a mega commercial green hydrogen project that converts green hydrogen into green ammonia and transports it to other continents such as Europe. SK Ecoplant holds a 20% stake in the first phase of the project. Samsung C&T plans to build a green hydrogen production facility with a maximum daily capacity of 300 tons in Australia in partnership with Australian hydrogen company IGE, targeting commercial operation by 2028.

SK E&S extracts hydrogen domestically. Utilizing natural gas industry infrastructure, it produces blue hydrogen as an intermediate stage of clean hydrogen. It is building a new production plant in Boryeong, Chungnam, and plans to produce and supply 250,000 tons of eco-friendly blue hydrogen annually by 2026 using nearby LNG infrastructure, Australian depleted gas fields, and carbon capture, utilization, and storage (CCUS) technology.

Experts recommend providing stronger incentives, such as production cost difference support, to companies that directly produce clean hydrogen. Hyunsook Jang, senior researcher at the Korea International Trade Association, said, “Due to unfavorable domestic conditions such as low sunlight and wind speed, the production cost of green hydrogen is disadvantageous,” and “the lack of production incentives compared to competing countries is expected to widen the production cost gap in the future.” She added, “A system to support the difference in hydrogen production costs should be legislated to promote private investment.”

SK E&S 'Boryeong Blue Hydrogen Production Base' Expected Bird's-eye View
Photo by SK E&S

Kim Seong-hwan, a member of the Democratic Party of Korea who proposed the amendment to the Hydrogen Act in January this year to establish the basis for green hydrogen subsidy support, said on the 13th, “The European Union has started direct government subsidies for green hydrogen production through the Carbon Contracts for Difference (CCfD), and the United States through the Inflation Reduction Act (IRA).” He added, “Among all stages of the hydrogen industry, Korea’s production stage competitiveness is weak, so support is even more urgent,” and “Beyond the clean hydrogen grading system the government is preparing, national support measures should be established to compensate for the production cost difference of green hydrogen.”

‘Pink hydrogen,’ produced using nuclear power, is emerging as a transitional alternative to lower hydrogen prices. In March, LG Economic Research Institute stated in a report titled ‘Driving the Hydrogen Economy through Policy Support’ that “The United States includes blue hydrogen and pink hydrogen in the clean hydrogen category besides green hydrogen and aims to achieve a hydrogen economy scale of 10 million tons by 2030,” and “It focuses on supply promotion policies that can reduce clean hydrogen production costs while providing sufficient investment incentives to producers.”

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