Hydrogen energy

[월간수소경제 박상우 기자] Reasons are given for subsidies for the production and import of green hydrogen.

On the 11th, Democratic Party MP Kim Seong-hwan proposed a partial amendment to the Hydrogen Economy Nurturing and Hydrogen Safety Management Act, which prepares the basis for supporting subsidies during the production and import of green hydrogen.

The current law, which was revised in June last year, includes the concept of clean hydrogen, which is divided into carbon-free, low-carbon and low-carbon hydrogen compounds, a certification system of clean hydrogen for all grades and administrative procedures and financial support for those who produce and use clean hydrogen.

However, green hydrogen does not receive adequate support compared to gray hydrogen. It is necessary to actively expand the supply of carbon-free hydrogen for carbon neutrality, but the production cost is significantly lower than gray hydrogen using oil, coal and natural gas.

While gray hydrogen is priced from $1 to 2.2 per kg, green hydrogen is priced from $3 to 7.2 per kg, a 3 to 4 times difference, making green hydrogen less competitive in the price. According to the Korea Management Research Institute, the price of green hydrogen is expected to fall between US$1.4 and US$2.3 per kilogram around 2030.

However, gray hydrogen is an unsuitable energy source in the carbon-neutral era because it emits carbon during the production process. On the other hand, green hydrogen is valued as a key technology for carbon neutrality because it does not emit carbon because it is produced by the electrolysis of water with renewable energy. The green hydrogen market is expected to reach $300 billion (about 375 trillion won) in 2050, so it’s very important to care about the technology.

For this reason, rumors are growing that government-level competitiveness assistance is needed until the economic feasibility of green hydrogen is achieved. However, in Korea, there is no basis for support to ensure the competitiveness of green hydrogen under the current law, and the government’s plan for this year is also focused on promoting gray hydrogen.

This amendment includes the content that the government subsidizes the production difference between gray hydrogen and producers or importers of carbon-free hydrogen produced using renewable energy. It aims to activate the supply of carbon-free hydrogen and actively achieve carbon neutrality.

Countries around the world are already preparing policies to support green hydrogen produced from renewable energies. The European Union has included a plan to introduce a carbon difference support contract (CCFD) system in REpowerEU, an energy conversion policy, to pay the difference in the cost of producing green hydrogen and gray hydrogen under form of subsidy.

The United States has added the world’s first green hydrogen tax credit system to the Inflation Reduction Act (IRA). Germany also plans to provide subsidies when green hydrogen produced outside the country is imported and supplied to Korea. Samil Accounting Firm expects the global green hydrogen market to reach US$300 billion (about 375 trillion won) by 2050.

Representative Kim Seong-hwan said, “For the energy transition focusing on renewable energy and the decarbonization of the industrial structure, the supply of green hydrogen needs to be further accelerated. It is a regrettable reality that the safety of green hydrogen is delayed due to lack of economic viability, and industrial competitiveness is also lagging behind.”