ULSAN, South Korea — Long a major shipbuilding and petrochemical center, the brawny industrial hub of Ulsan has become a sandbox of experimentation for the next stage of South Korea’s development — transforming its economy from one based on fossil fuels to hydrogen.
The city’s Jangsaengpo port, once a major whaling center, looks typical except for two anchored hydrogen-fueled vessels and a charging station that services them. The boats — named Hydrogenia and Bluebird — can sail up to eight hours on a 40-minute charge, according to H2Korea, a joint entity between the government and private sector. After more than 2,000 hydrogen fuel cell cars hit the streets of the metropolis earlier this year, boats are the next vehicles to go green.
“We have tested the boats in the coastal oceans since June last year, applying a hydrogen fuel cell power system,” Lee Seung-hoon, a director at H2Korea, told reporters in late May in Ulsan, located on the country’s southeast coast. “We plan to announce standards for hydrogen boat facilities later in cooperation with the Ministry of Oceans and Fisheries. We are collecting data which will be used for setting up safety regulations.”
South Korea, poor in natural resources, is accelerating its drive toward a hydrogen-based economy as the government expects the lightest element to replace fossil fuels in the near future and bring business opportunities. But it faces challenges in the form of competition from other countries as well as overcoming skepticism at home over whether hydrogen is the most economical choice.
The Hydrogenia, a hydrogen-fueled boat, can sail up to eight hours on a 40-minute charge. (Photo by Kim Jaewon) Previous President Moon Jae-in paved the way for the project as the liberal-leaning leader was negative about nuclear power, worrying that South Korea could face the same fate as Japan did in the 2011 Fukushima earthquake and tsunami disaster. He needed something new in the form of a clean energy source with the potential to replace nuclear power and seized on hydrogen.
Moon and his wife Kim Jung-sook took a ride on Nexo, a Hyundai Motor hydrogen-fueled sport utility vehicle during their visit to Paris four years ago. Hyundai exports Nexo, as well as Tucsan, another hydrogen model, to France.
Now, Yoon Suk-yeol, Moon’s conservative successor who took office in May, has made it clear he will continue the hydrogen strategy, in a somewhat surprising move, given that he opposes many of his predecessor’s policies. In a speech at the World Gas Conference in the South Korean city of Daegu late last month, Yoon promised to continuously invest in the hydrogen economy as part of government policy, saying a reasonable energy mix matters to the country.
“The government will invest in technology to cut carbon emissions, as well as establish stable hydrogen supply chains by adding more hydrogen production infrastructure at home and abroad,” Yoon said.
On the business side, Hyundai Motor is taking the lead by launching hydrogen-fueled cars, trucks and even tractors. The world’s fifth-largest automaker in combination with smaller affiliate Kia views hydrogen as a clean energy solution for commercial vehicles due to convenience in production, transportation, distribution and storage.
“Hyundai Motor is a leader in the hydrogen fuel cell market with decades of experience and proven expertise,” Jose Munoz, president and chief operating officer of Hyundai Motor, said in a statement after the company deployed its XCIENT Fuel Cell tractors at the Port of Oakland last month. “[It] is just the beginning of our goals as we work with partners to fight climate change and build a more sustainable future.”
Hydrogen fuel cells are stored in containers in Ulsan for transport. (Photo by Kim Jaewon) While Hyundai is focusing on mobility, South Korean conglomerate Doosan boasts expertise in power generation using hydrogen fuel cells. The company acquired ClearEdge Power, a U.S. energy company in 2014, absorbing its technology to generate such power.
Now, Doosan Fuel Cell, the conglomerate’s hydrogen energy unit, is generating power for global clients including U.S. telecom giant Verizon’s data center in California, Coca-Cola factories in Connecticut and New York as well as Aberdeen Exhibition and Conference Centre in Scotland.
“I hope you see power generation batteries from the perspective that they can provide clean energy and clean heat,” Moon Sang-jin, vice president at Doosan Fuel Cell, said at a news briefing in Ulsan.
South Korea also sees export opportunities in hydrogen transformation. Hyundai Motor has exported 46 XCIENT hydrogen trucks to Switzerland so far and plans to sell 1,600 of the vehicles by 2025. Last year, the automaker broke ground for the construction of hydrogen fuel cell production lines in Guangzhou, China.
Ulsan, the headquarters of Hyundai Heavy Industries and a major shipbuilding center, has become home to the energy transition project. Hyundai Motor, Doosan and other companies are testing their hydrogen technology and products in the city, where the element is cheap and plentiful as it is produced as a byproduct from refining petrochemicals, a major local industry. The hydrogen is currently burned off for heating in the refining process or released into the atmosphere, so using it doesn’t add significantly to the carbon footprint of the refineries, according to South Korea’s Ministry of Trade, Industry and Energy.
So far, 2,481 hydrogen fuel cell cars were on the road in the city as of March, with 11 charge stations available.
Lee Seung-hoon, a director at H2Korea, says it is working with the Ministry of Oceans and Fisheries on setting standards for hydrogen boat facilities. (Photo by Kim Jaewon) South Korean companies including conglomerate SK, Hyundai Motor and steel major Posco announced last year that they would spend a combined 23 trillion won ($18.2 billion) on hydrogen ambitions, but they face competition. The U.S. is a pioneer in the sector, passing the Energy Policy Act in 1992 which was the world’s first mention of hydrogen policy. In particular, California is the most aggressive state in the hydrogen economy, establishing 62 retail hydrogen charge stations by the end of 2021.
Germany, meanwhile, is the leader in Europe, announcing in 2020 the investment of 9 billion euros ($9.6 billion) in building hydrogen infrastructure. Japan is working on a project to build liquid hydrogen supply chains by 2030 in cooperation with companies such as Kawasaki Heavy Industries, J-Power, Iwatani Corp. and Shell Japan.
Despite support from the South Korean government and investments from companies in the country, there remain concerns about how hydrogen can compete with other renewables in costs as it is much more expensive to produce, store, transport and use.
Choi Yong-ho, energy, resources and industrial products sector leader at Deloitte Consulting, said that there is still a long way to go to bringing down those costs.
“As the hydrogen economy is in its early stage globally, technology in all the hydrogen value chains should be developed to reduce costs,” Choi said. “The industry should search out large-scale demand to cut capital expenditures in transport and storage.”
Still, analysts say it is inevitable that South Korea tries to move to hydrogen from fossil fuels, given that South Korea imports 97% of its energy sources, according to figures from Samjong KPMG Economic Institute.
“However, it is possible to produce [energy] at home in the hydrogen economy. Transition to hydrogen economy will be a key policy measure as all the world declares net-zero and takes actions for it,” the institute said in a report released in October.