South Korea Makes a Fresh Push for Hydrogen Vehicles

The South Korean government and the private sector will invest 2.6 trillion won by 2022 to build a hydrogen car industry ecosystem and stay ahead of the game in the global hydrogen car market. They plan to expand hydrogen production plants and establish package-type hydrogen filling stations to supply 16,000 hydrogen vehicles by 2022.

The Ministry of Trade, Industry and Energy held a second meeting on the "Industrial Innovation 2020 Platform" at the Grand Intercontinental Hotel in Seoul on June 25 with industry officials and experts. The meeting was attended by key members of the hydrogen car ecosystem, including Kwon Moon-shik, vice chairman of Hyundai Motor; Kwon Han-joo, CEO of Hyosung Heavy Industries; Lee Jae-hoon, president of SK Gas; and Kim Hyung-keun, president of Korea Gas Safety Corporation.

The government and the industry plan to strategically cooperate to preempt the global hydrogen car market. They are going to establish a hydrogen car industry ecosystem, involving all stakeholders ranging from hydrogen car producers and hydrogen filling station operators to hydrogen energy suppliers.

To this end, the government and the industry will invest 190 billion won this year and 420 billion won next year. By 2022, 2.6 trillion won will be invested in hydrogen car production facilities, hydrogen bus production, hydrogen storage containers for buses, and stack plant expansion.

Currently, there is no plant that produces hydrogen buses. Hyundai Motor plans to set up a new line dedicated to production of hydrogen buses in its plant in Jeonju, which currently produces ordinary buses.

In particular, to achieve the goal of supplying 16,000 hydrogen cars by 2022, the government plans to implement a hydrogen bus subsidy program and reduce the hydrogen bus acquisition tax for transportation companies in 2019.

Minister Baek Woon-kyu said, "To achieve the goal of supplying 16,000 hydrogen cars, the government needs a total budget of 450 billion won by 2022."

The government and the industry have decided to supply hydrogen energy at a lower price than diesel and liquefied petroleum gas (LPG) by 2022. At present, the price of gasoline as a transport fuel is 155 won per kilometer and that is 92 won (US$0.082) for diesel and 83 won (US$0.074) for LPG. The government’s target price for hydrogen is approximately 70 won (US$0.063).

For this, they will build a stable supply and distribution system of hydrogen energy. Next year they will launch a demonstration project to build a “Power to Gas” (P2G) system, which produces hydrogen using the surplus power of renewable energy.

In November, a special purpose company is slated to be established to develop hydrogen charging stations. This company is going to work on charging stations that can be used by hydrogen buses and non-bus vehicles alike to reduce the construction costs of charging stations by more than 30% by 2022.

The Ministry of Trade, Industry and Energy expects its hydrogen car project to create 3,800 jobs by 2022, including 400 this year and 480 next year.

Market Confused by Policy Inconsistencies

Some experts, in the meantime, point out that a lack of policy consistency has been hindering the development of hydrogen fuel cell vehicles in Korea.

Hyundai Motor built hydrogen vehicle manufacturing facilities years ago in accordance with the government’s plans and targets, but the facilities have never been fully utilized due to the government’s constantly changing goals.
 

In 2016, Hyundai Motor built facilities that could produce 4,000 units of the Nexo, a second-generation hydrogen vehicle, a year. The plant construction was based on the government’s eco-friendly vehicle development and supply plan released in December 2015. Under the plan, Korea was supposed to increase the production of hydrogen vehicles to 100 units in 2016, 300 in 2017, 2,000 in 2018, and 9,000 in 2020.
 

The government’s hydrogen vehicle-related plans, however, have shown little consistency since then. In its particulate matter management plan released in September last year, the target volume for 2020 was adjusted to 10,000. However, it was halved in less than one year as the government decided to shift the focus of its subsidy program from hydrogen cars to electric vehicles in view of a larger demand for the latter.

The government’s demand forecast was proven wrong when Hyundai Motor released the Nexo in March this year. More than 1,000 customers ordered the vehicle in its presale period of less than a week. “The original target of 10,000 hydrogen cars can be fully met once subsidies are sufficiently provided,” said a high-ranking executive at the company.
 

Early this year, the government earmarked hydrogen vehicle subsidies for only 200 units. After the presale, it hurriedly increased the budget by 11.2 billion won (US$10.1 million) in May. About 500 cars can be covered with this additional subsidy. This is why experts are criticizing the government for its makeshift measures.
 

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