South Korea Cuts Price of Domestic Natural Gas for Hydrogen Production by 25%
04 Nov 2021 by spglobal.com
South Korea has cut the domestic price of natural gas used to make hydrogen by 25% to help lower hydrogen production costs in a bid to boost hydrogen consumption and LNG demand, the energy ministry said Nov. 4.
"The government has lowered natural gas prices used to make hydrogen for vehicles by 25% since this month," a Ministry of Trade, Industry and Energy official said.
"The price cut would be effective for three years until October 2024 when the government will consider whether to extend it, given the country's production of green hydrogen and blue hydrogen," he added.
Hydrogen derived from natural gas through steam methane reforming is called "grey hydrogen" because it is based on fossil fuel, while green hydrogen is made by using renewable energy to split water through electrolysis that produces an emissions-free product. Blue hydrogen refers to hydrogen produced from fossil fuel in a process that captures carbon dioxide emissions.
"The three-year price cut of national gas would lower the country's hydrogen production costs, which would lead to an earlier opening of a 'hydrogen society' based on green hydrogen production and consumption," the ministry official said.
South Korea has been pushing for a "hydrogen society" that uses hydrogen as a major energy source for transportation and power generation in the country so as to achieve carbon neutrality by 2050.
Under its hydrogen energy vision unveiled in October, the country aims to produce 1 million mt/year of hydrogen by 2030, comprising 250,000 mt/year of green hydrogen and 750,000 mt of blue hydrogen, before ramping up to 5 million mt/year by 2050, comprising 3 million mt/year of green hydrogen and 2 million mt/year of blue hydrogen.
The country is also pushing to raise hydrogen demand to 3.9 million mt/year in 2030 from 220,000 mt currently, then to 27 million mt/year in 2050.
South Korea also targets having 850,000 hydrogen-powered vehicles by 2030, up from 12,000 currently, and to install 660 hydrogen charging stations by 2030, up from the current 70.
Under the vision, the country's businesses such as Hyundai Motor Group, SK Group, GS Group POSCO Group and Hyosung Group will make a combined Won 43 trillion (W36.4 billion) available by 2030 for their hydrogen projects, according to the ministry.
President Moon Jae-in has promised to turn his country into "a global leader in transitioning from a fossil fuel-based economy to a hydrogen-based one."