[Reporter’s Notebook] Companies Scale Up Hydrogen Business as Government Reduces Support

"A predictable policy environment is essential for companies to continue with mid- to long-term investments."

This was the request made by Eunhee Hong, Head of Energy and Hydrogen Business Division at Hyundai Motor Group, to the government at the Korea-China Hydrogen Policy Forum on September 17. It is unusual for a senior executive of a company expanding into the hydrogen sector to openly call for consistent policymaking in a public forum, underscoring just how significant the concerns are within the industry.

In the 2027 budget proposal announced by the government on September 1, the subsidy for hydrogen vehicles was set at 445.7 billion won, a 23% decrease from the previous year, and the subsidy for charging stations was allocated at 119.7 billion won, down 37%. The auction volume for general hydrogen power generation was also reduced from 1,300 GWh to 930 GWh. The Hydrogen Economy Committee, which serves as the control tower for hydrogen policy, has not announced any meetings following its last session in November 2024.

The reason that government policy is so critical in the hydrogen industry is clear. Hydrogen is not a commodity that sells simply because a production facility is built. A market for hydrogen vehicles and buses needs to be established so that charging stations can generate revenue, and a robust network of stations and transportation infrastructure is essential for producers to secure stable demand. In the early stages, high costs and uncertain demand make it difficult for private companies to assume responsibility for the entire value chain.

Hyundai Motor Group's Saemangeum project demonstrates the scale and time frame of corporate investment. The group plans to invest 1 trillion won to build a 200 MW electrolysis plant, producing approximately 30,000 tons of clean hydrogen annually to be used in artificial intelligence (AI) data centers, hydrogen cities, and various mobility solutions. Because this is a long-term project aimed at developing both supply and demand, any wavering of policy could lead to companies reassessing the viability of their projects and delaying investments.

Global competitors are expanding their markets through long-term support measures. Japan is bridging the price gap between low-carbon hydrogen and fossil fuels for up to 15 years. China has designated pilot city groups to promote hydrogen use in fuel cells and transportation, and is now extending support to industrial sites as well.

It is difficult for the hydrogen industry to produce results in a short period of time. However, this does not mean that the government must increase support every year. What matters is that the direction and criteria of support, as well as the schedule for expanding the market, should be predictable. If the government has called on companies to invest in the hydrogen sector, it now needs to demonstrate policy consistency until those investments bear fruit. Energy security is not achieved through declarations, but by maintaining supply chains built in anticipation of potential crises.

This content was produced with the assistance of AI translation services.