Hydrogen law, regulations & strategy in South Korea

South Korea is one of the world’s leaders in developing hydrogen technologies, with hydrogen-powered vehicles already widely deployed and utility-scale fuel cell power plants operational. South Korea continues to have hydrogen at the forefront of its economy and has policies and projects in place to move towards clean hydrogen.

Although, as is the case globally, most of the current domestic hydrogen production is 'grey' hydrogen, the country is actively working towards transitioning to low-carbon hydrogen production using renewable sources and CCUS technologies. In 2024, South Korea launched the Clean Hydrogen Certification System and the Clean Hydrogen Portfolio Standards, which are designed to promote the production and use of clean hydrogen and create the necessary infrastructure. In October 2024, North Gyeongsang Province announced a significant project to build a 100 MW nuclear hydrogen facility, which will be part of a broader initiative including a 1,000 km pipeline network and a hydrogen/ammonia import terminal. This network will support the integration of hydrogen production facilities and end-users. 

In terms of consumption, South Korea is a global leader in hydrogen fuel cell electric vehicles (FCEVs), with approximately 14,500 FCEVs in operation, representing 33% of the global total. The government aims to have 6.2 million hydrogen vehicles on the road by 2040. Additionally, the country has been expanding its hydrogen bus fleet, with the number of registered hydrogen buses reaching 1,000 by July 2024 and with the aim of having a quarter of all metropolitan buses (21,200 hydrogen buses) in operation by 2030. The government is also focusing on increasing the number of hydrogen refuelling stations, with plans to build 1,200 stations by 2040.

The country is also a world leader in hydrogen-based electricity generation, with numerous operational fuel cell facilities. South Korea became the first country to hit the 1GW mark for fuel cells installed for power generation in 2023 and is home to the largest fuel cell facilities in the world: the 78.96MW Shinincheon Bitdream Fuel Cell Power Plant. It also launched the world’s first bidding market for power generated from clean hydrogen in 2024. 

As for storage, the country recently inaugurated its first commercial-scale liquefied hydrogen plant in Changwon, which can produce up to 5 tonnes of liquefied hydrogen per day. This facility is expected to improve the efficiency of hydrogen transportation and storage, as liquefied hydrogen has a much higher density compared to gaseous hydrogen. Additionally, the government is supporting the development of hydrogen storage infrastructure through regulatory changes and incentives.

There is a strong push towards clean hydrogen:

• In November 2023, South Korea amended the 'Hydrogen Economy Promotion and Hydrogen Safety Management Act' to establish a clean hydrogen certification system. This system sets stringent greenhouse gas emissions standards for hydrogen production, with a threshold of 4 kg CO₂eq/kg H₂, and classifies hydrogen into four grades based on emissions. The system also designates certifying institutions to oversee the certification process.
• In 2024, South Korea will fully implement the Clean Hydrogen Portfolio Standards (CHPS), which incentivises power producers to use clean hydrogen by offering long-term purchase contracts. The system will open a forward market in 2027.
• In May 2024, South Korea launched the world's first clean hydrogen power generation auction market, allowing power companies to enter 15-year hydrogen purchase contracts. Bidders are evaluated based on the price of electricity and emissions from hydrogen production, with maximum points for hydrogen produced with less than 0.1 kg CO₂eq/kg H₂. 

Furthermore, the Korean government is creating hydrogen specialised complexes, integrating businesses involved in the hydrogen lifecycle. Namely, Donghae and Samcheok in Gangwon Province, and Pohang in North Gyeongsang Province, have been selected as the first specialised complexes, with construction planned to be completed by 2028. 

Hydrogen demand rose by 59% in the first nine months of 2024, reaching 6,389 tonnes. This spike in demand is attributed partially to the rising number of hydrogen buses in the country. 

The South Korean government has set a target for hydrogen-powered buses to account for 25% of the nation's intercity buses by 2030 and is aiming to have 21,200 hydrogen buses in operation by 2030. As of August 2024, 1,185 hydrogen-fuelled buses were already supplied nationwide, including around 40 operating on intercity bus routes in the Seoul metropolitan area. In fact, in May 2023, South Korea signed a business agreement with 14 companies, including conglomerates like Samsung, Hyundai, and SK Group, along with 12 local governments, to deploy 2,000 hydrogen-powered commuter buses by 2026. 

South Korea’s 2019 Hydrogen Economy Roadmap set out plans to produce 6.2 million FCEVs and 1,200 refuelling stations by 2040. Whilst the government intends to have 300,000 FCEVs on the roads by 2030, a recent downturn in the market for FCEVs led to hydrogen vehicle registrations falling more than 50% in 2023, with only 35,000 (cars vans, trucks) on the road. This could be due to several factors, including high costs, limited infrastructure, and competition from other zero-emission vehicles like electric cars. In response, the government is focusing on expanding the hydrogen refuelling infrastructure, providing incentives for hydrogen vehicle purchases, and promoting public awareness of the benefits of hydrogen mobility. 

South Korea is also developing hydrogen trams. The city of Daejeon has signed a contract for its first hydrogen trams under the Daejeon Urban Railway Line 2 project. This will be around 40 km of rail line with the trams being built by domestic manufacturer, Hyundai. Construction is to start in January 2025 and is expected to start service in 2028 after they underwent successful trials in Ulsan, which is now operating its own network. Likewise, Jeju is in the process of developing a comprehensive urban rail network that integrates hydrogen trams with other modes of transportation, such as buses. 

The possibility for the application of hydrogen-fuelled planes opens a market for core air mobility parts. In July 2024, the public offering project from the Ministry of Trade, Industry and Energy, was secured by South Chungcheong Province to build a green urban air traffic and future aircraft core parts test and evaluation centre by 2026. The goal is to support the development of localised technology and to develop the core parts industry for future aircraft bodies based on hydrogen fuel cells. 

Currently, in North Gyeongsang Province, Boryeong and Cheonan ammonia hydrogen fuel electricity is being promoted, with the domestic commercialisation of hydrogen bikes. As a result of the Regulatory Free Zone and the Life-friendly Hydrogen Consumption Regulatory Free Zone, a new market for small transport applications has emerged. The projects in the above areas are developing a fuel cell for a 500 MW class hydrogen cargo bike and building a charging system for these small mobility applications.

South Korea has made significant progress over the past 18 months in the development of industrial and regional clusters, dedicated to hydrogen production, use and storage. 

In October 2024, Ansan has become the first hydrogen demonstration city in Korea, completing its hydrogen infrastructure project after 4 years and 8 months. The project involved the construction of hydrogen pipelines, fuel cells, and other infrastructure to support hydrogen-based energy transition and local economic revitalisation. The city has installed a 440kW PAFC (Phosphoric Acid Fuel Cell) developed by Doosan Fuel Cell, which supplies electricity and heat to nearby residential and commercial buildings. Ansan's hydrogen infrastructure includes a hydrogen production facility capable of producing 1.8 tonnes of hydrogen per day, which is distributed through a network of pipelines. 

In November 2024, the government launched the "Next Level Hydrogen City Initiative," which adds Ulsan, Seosan and Uljin as the latest set of hydrogen cities for a total of 12 hydrogen cities 1 , and seeks to address the limitations of previous hydrogen city projects. The initiative will seek to promote the use of blue and green hydrogen, expand hydrogen infrastructure, and integrate hydrogen into various sectors such as industry, healthcare, and culture. The initiative includes the development of hydrogen production facilities, hydrogen pipelines, and hydrogen-powered mobility solutions, with a goal to increase the share of blue and green hydrogen in hydrogen cities from 10% in 2027 to 50% by 2040. 

In addition to hydrogen cities, hydrogen industrial clusters are also moving forward. By 2030, South Korea plans to invest 250 billion won to create a national industrial complex specialising in hydrogen in Wanju, North Jeolla Province. This initiative aims to establish a robust hydrogen commercial vehicle innovation ecosystem, with a government-wide promotion support group assisting with licensing, permitting, and system improvements. Establishing the 'Hydrogen Commercial Vehicle Reliability Verification Centre' is a cornerstone of this initiative. The Centre will cover an area of 6,931m², featuring Korea's largest hydrogen commercial vehicle evaluation equipment and 200kW fuel cell system reliability and evaluation equipment. 

The government designated Yeosu Myodo Island as a Special Opportunity Development Zone. This initiative aims to attract large-scale investments, overcome local extinction crises, and revitalise the local economy. Yeosu City has been promoting the creation of a hydrogen industry cluster since July last year, covering the entire cycle of clean hydrogen production, storage, transportation, and utilisation. Yeosu City signed an investment agreement with Linde and Hanyang in May last year, under which Linde and Hanyang will invest US$800 million by 2030 to produce 80,000 tonnes of blue hydrogen per year and capture 430,000 tonnes of carbon dioxide annually. Additionally, Hanyang signed a joint development agreement with Air Products in November last year to build clean ammonia and hydrogen infrastructure. The Myodo Eco Energy Hub will include a Northeast Asia LNG Hub Terminal, a Cogeneration Power Plant, and a Hydrogen and Ammonia Terminal. Hanyang, Linde, and Air Products will collaborate to develop this hub. 

Furthermore, President Yoon has announced plans to develop North Gyeongsang Province into a "hub for the hydrogen industry" with an 800 billion won project to create a "hydrogen economy industrial belt" on the East Sea coast. The Pohang Hydrogen Fuel Cell Cluster will integrate production technology of major fuel cell materials and parts. The Uljin Nuclear Hydrogen National Industrial Complex will produce, store, transport, and utilise 300,000 tonnes of clean hydrogen annually, using electricity from nuclear power plants and high-temperature heat from nuclear power. 

South Korea has been focusing on creating supportive policies and frameworks to help foster clean hydrogen production and utilisation. 

Various frameworks and incentives were established:

• The Clean Hydrogen Certification System was finalised in December 2023. This is a system for certifying hydrogen as clean based on its greenhouse gas emissions during production, with a threshold set at 4 kg CO₂eq/kg H₂. The certification process involves a detailed life cycle assessment (LCA) from raw material extraction to hydrogen production, ensuring that only hydrogen produced with minimal emissions is recognised as clean. 
• The Clean Hydrogen Portfolio Standards (CHPS) is designed to promote the use of clean hydrogen in power generation by establishing a bidding market where power producers can secure long-term purchase contracts of up to 15 years. This system is expected to drive demand for clean hydrogen and provide a stable market for producers, thereby encouraging further investments in the sector.
• Key hydrogen production technologies, including water electrolysis and carbon capture, have been designated as national strategic technologies, allowing companies to benefit from increased tax credits for R&D and facility investments. Large corporations can receive up to 40% tax credits for R&D expenses, while small and medium-sized enterprises (SMEs) can receive up to 50%. Additionally, tax credits for facility investments have been increased to 15% for large corporations and 25% for SMEs, further encouraging investments in clean hydrogen infrastructure.  

In addition to these policy measures and incentives, South Korea has launched several ambitious projects to advance clean hydrogen production. One notable project is the development of a 10MW hydrogen production plant in Uljin, which leverages nuclear energy to produce hydrogen through low-temperature electrolysis. This project, led by Korea Hydro & Nuclear Power (KHNP) in collaboration with major companies like Samsung C&T and Doosan Enerbility, aims to produce over 4 tonnes of clean hydrogen per day by 2027.  

The government has also been proactive in supporting R&D efforts to enhance hydrogen production technologies. For instance, the Korea Institute of Energy Research has developed a technology for producing high-purity hydrogen from ammonia without carbon dioxide emissions.  This innovative approach involves using residual hydrogen and ammonia as heat sources in the decomposition process, eliminating the need for fossil fuels and thereby reducing emissions. Such advancements in technology are crucial for making clean hydrogen production more efficient and economically viable. 

There are also international collaborations. Initiatives like the 'Overseas Clean Hydrogen and Ammonia Production Base Construction Project' aim to establish production bases abroad, ensuring a stable supply of clean hydrogen for domestic use. Clean hydrogen was included in the 'Overseas Resource Development Loan Project,' allowing for financial support of up to 30% of project costs through general and special loans – and further incentivising international partnerships.