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▶ The Hydrogen Economy, Key for the Korean Green New Deal Policy
The hydrogen industry which refers to an economy that relies on hydrogen as fuel for energy production, storage and commercial applications is largely comprised of hydrogen energy production on the supply side and the utilization of energy generated across the hydrogen value chain on the demand side.
The supply side of the hydrogen economy represents a set of activities stepping into the full lifecycle of hydrogen production, storage and delivery to the end-users, which inevitably accompanies the full range of infrastructure and hydrogen storage-distribution technologies, whereas the demand side of the market is predominantly focused on hydrogen mobility and fuel cells.
The hydrogen industry in Korea is currently estimated to enter the prototyping process in the development phase, although it may slightly differ by segment. The business is presumed to set foot in the commercial market in 2025 and be in the rapid growth stage in 2030.
The industry ecosystem in which small and medium-sized enterprises (SMEs) tend to take up a large share of the market is primarily divided into two sectors; one is for hydrogen production, storage and transportation where SMEs represent an important source of the economy, and the other is for hydrogen-powered vehicles and fuel cells mounted on fuel cell electric vehicles (FCEVs) developed mainly by large companies (and a few small businesses).
With regard to processing technologies to formulate resources, the production of by-product hydrogen extracted from petrochemical plants is now almost ready for its commercial debut. Other types of hydrogen production using a method of steam-methane reforming (SMR) or electrolysis, the process that uses electricity to decompose water into hydrogen and oxygen, on the other hand, still remains in the early stage where preliminary feasibility studies are undertaken along the development timeline.
For hydrogen storage and transportation, the technology whereby hydrogen is kept under certain pressures in the form of compressed gas is in the phase of commercialization, while other processing technologies such as hydrogen liquefaction and liquid organic hydrogen carrier (LOHC) are in a relatively nascent stage of development.
Market analysis says Korea, which has already showcased its fuel cell vehicles in 2013, is highly competent in hydrogen mobility, but trails a bit in untapped commercial transportation applications like hydrogen vessels, trains or UAVs that are mostly in the early stages of development.
By its industrial applications, fuel cells are classified into four segments: transportation, on-site hydrogen storage for households (or buildings) and stationary or portable power stations. Korea is considered to be at the forefront of fuel cell technologies virtually for any application but transferable power generators.
According to a list that compares FCEVs sales by country, Korea maintained the top spot with 7,682 hydrogen cars sold (or distributed) nationwide in the first half of 2020, and its fuel cell capacity deployed as of 2019 was approximately 408 MW. The data implies much of the R&D investments (over 50%) or development efforts that the government has long made concentrates largely on hydrogen applications in transport such as vehicular technologies or fuel cells.
Still, much remains to be done in developing hydrogen refueling facilities or Green Hydrogen (hydrogen generated without fossil fuels) technologies. Korea currently runs 58 fueling stations across the country, which falls short of the initial target stated in the “Plan to Develop Hydrogen Infrastructure and Refueling Station (Oct. 22, 2019)”. And the fact that it lacks the resources to develop commercial solutions and feasibility assessments to substantiate the viability of the Green Hydrogen business well implies that the country needs a kick start in mapping out a detailed policy framework to overcome the limitations in hydrogen production.
▶ Korea’s Hydrogen Economy Roadmap
Korean government has sought a more active role in helping push hydrogen business growth forward since it has announced the state-led initiative entitled the “Hydrogen Economy Roadmap” in January 2019. Among others, the government’s effort to enact the world’s first legislation on the hydrogen industry, dubbed the “Hydrogen Economy Promotion and Safety Management Act” (Hydrogen Act), which recently came into force on Feb. 5, 2021, was assessed to be the very first step into a transition toward the hydrogen economy.
The Hydrogen Act entails a dual-track approach: a legal framework as a means to support and explore the potential of the hydrogen economy, as well as for preventive and protective measures for safety management. The Ministry of Trade, Industry and Energy (MOTIE) is set to endorse the ratification of “Hydrogen Roadmap 2.0” and the “Action Plan on Hydrogen Economy” following the enactment of the Hydrogen Act.
Policy |
Objective |
Hydrogen Economy Roadmap |
- Set a target to become a leading country in the hydrogen industry with two vital pillars: FCEVs and fuel cells |
Hydrogen Economic Standardization
Strategy Roadmap |
- Set international industry standards particularly in the areas where Korea can take the lead in related technologies
(to acquire 20% of the industry standard certificates) |
Plan to Develop
Hydrogen
Infrastructure and Refueling Station |
- (Supply of hydrogen energy) Meet hydrogen demand through production diversification and infrastructure development in
storage and transportation |
Hydrogen
Technology
Development
Roadmap |
- (Hydrogen production) To meet energy demand, equivalent in volume to 5.26 mln tons by 2040 and to lower the energy price
to KRW 3,000 per each kilogram, cheap enough to compete with fossil-fuel sources by 2040 |
Comprehensive Hydrogen Safety Management Plan |
- Facilitate safety management system to reach globally acceptable level (Enactment of Hydrogen Act, TF formation etc.) |
Hydrogen Act |
- Passed the world’s first “Hydrogen Economy Promotion and Safety Management Act” at the 2020 legislative session |
Plan to Improve
Competitiveness in the Hydrogen
Ecosystem |
- (Businesses) 1) Foster world-leading companies by each business segment: production, transport and utilization of the
hydrogen economy 2) Devise policies to encourage more companies to join activities in the hydrogen sector |
▶ Future Mobility that Lies at the Heart of the Rapidly Evolving Industrial Landscape
Korea’s future car industry is sharpening its competitive edge in an ever-changing business landscape with the advent of unforeseen trends such as slow growth in the global market for finished vehicles, a paradigm shift that arises across all industries and the drive toward environmental sustainability.
As global demand has dried up, finished car exports1) in Korea which had been on a roll-coaster ride since they reached the peak of USD 48.4 billion in 2014 have experienced a downward journey, falling to USD 37.4 billion in 2020. In stark contrast to Korea’s finished vehicle exports slipping into contraction, EV sales have constantly been on the rise accounting for a larger share of total auto exports.
In the face of disruptive tech-trends driving the new wave of auto-innovations such as self-driving cars, emission-free electric vehicles and future transportation technologies, the conventional automotive industry is busy forming cross-sector partnerships between car manufacturers and software companies or developing new collaboration models with battery makers.
Increasingly tougher environmental regulations adopted across major economies have pushed global carmakers to produce less polluting cars like EVs or FCEVs. To this end, Korea’s future mobility industry has begun to expand into global markets for greener and autonomous vehicles, while developing future mobility platforms and technologies to unlock growth opportunities.
Korean automakers have seen green car sales hit fresh record highs both at home and abroad amid a slump in finished car exports in 2020. With a rise in domestic sales of all types of green cars2), eco-friendly cars have started to expand the market share, representing over 10 percent of total car sales for the first time.
Export volume of green cars in 2020 totaled 276,439 units, up 6.8 percent year-over-year, and the proportion of trade values and volumes shipped overseas in total auto-exports recorded 19.1 percent and 14.7 percent respectively. As of 2019, Korea, the fifth most competitive in the global plug-in hybrid or hybrid vehicle market, was reported to be the fourth largest EV exporter.
Moreover, Korea has continued increasing R&D investments in self-driving car technologies, shaping a network infrastructure as foundation for autonomous driving.
The government has built a full-mock city named “K-City” to test and simulate autonomous vehicles in 2018, and the Ministry of Land, Infrastructure and Transport (MOLIT) instituted a statutory base for the dedicated testing site by bringing the “Act on the Promotion of, and Support for Commercialization of Autonomous Driving Motor Vehicles” into force in May 2020.
Government spending on the promotion of Intelligent Transportation System (ITS) has consistently increased since 2011, and the budgets allocated in 2017 (KRW 571.2 bln, sourced both by the public (KRW 225.1 bln) and private (KRW 212.2 bln) sectors) have more than doubled in size from the 2011 national spending (KRW 259.5 bln).
▶ Korea, Laying Out Intensive Support Programs to Help Pick Up the Pace of the Commercial Introduction of Future Mobility Technologies
In line with MOTIE’s “Fourth Basic Plan for Eco-Friendly Vehicles,” Korea is aiming to build an ecosystem to help promote the viability of pollution-free cars across our society and industry as a whole, and to further expand EV adoption nationwide.
Under such plan, the Korean government is on target to increase the number of green cars on the road adding up to 2.83 million (7.85 million) or 51 percent (83 percent) of all new car sales figures in Korea by 2025 (2030), thereby consequentially contributing to a 24 percent of reduction in greenhouse gas emissions by 2030.
The Korean government rolled out the “Strategy to Encourage a Widespread Adoption of Future Cars and to Take the Lead in the Future Mobility Industry” in October 2020, which outlines actions needed to reach targeted goals: to export 460,000 EVs; 70,000 hydrogen fuel-cell cars and 300,000 hybrids; and to build up the share of green cars to 35 percent of total finished car exports by the end of 2025.
By implementing a set of mandatory guidelines that spell out insurance requirements determining the scope of liability and the initial grant of coverage, along with safety standards for self-driving vehicles, the Korean government is planning to authorize extensive but conditional autonomy (Level 3) to self-driving cars starting in 2022, and to target complete the full rollout of level 4, which ensures a high level of autonomy without requiring any human intervention for commercial use starting in 2024.
In an attempt to push the plan forward, the authorities are set to further advance vehicular sensor networks to help cars running on the roads become more fully cognitive and intelligent so as to form what’s called “Cooperative-Intelligent Transportation System (C-ITS),” which allows safe, connected and highly automated mobility on almost all (inter)state highways stretching nearly 4,075 km by the end of 2025.
Such efforts to promote a nationwide adoption of future vehicles, to form an infrastructure and to advance technologies of future transportation are highly anticipated to spur automotive businesses on to accelerating market expansion overseas.
Policy |
Objective |
Autonomous Driving Technology
Development
Innovation Project |
· Lay foundations for full commercialization of integrated forms of level 4+ self-driving technologies by 2027 |
Mid-Long Term
Master Plan for
the Development
and Supply of
Eco-Friendly Cars |
· Expand the adoption of green cars: 2.83 mln by 2025, 7.85 mln by 2030 |
Regulatory Reforms to Improve Green Car Infrastructure (Charging Networks, Parking Facilities, Commercial
Applications) |
· Expand workplace/residential EV charging networks accessible to the public |
A Plan to Develop a Precise Roadmap
For Self-Driving Cars |
· Ready to unveil highly detailed map datasets required to test autonomous vehicles once road construction projects come
to an end |
Sul-Ki, Lee (sulkilee@kiet.re.kr), Yeonhong, Yu (yeononge@kiet.re.kr) Korea Institute for Industrial Economics and Trade
< The opinions expressed in this article are the author’s own and do not reflect the views of KOTRA. >