Natural Gas Prices for Hydrogen Production Reduced by 25% Over 3 Years

[Sejong=Asia Economy Reporter Kwon Haeyoung] The Ministry of Trade, Industry and Energy announced on the 31st that it will reduce the natural gas price (raw material cost) for hydrogen production for vehicle charging by 25% for three years starting from the 1st of next month.

Currently, the natural gas price used for hydrogen extraction is charged differently depending on the final use of hydrogen, such as transportation, industrial use, fuel cell use (under 100 MW), and power generation (over 100 MW). According to this measure, natural gas for hydrogen production for vehicle charging will be supplied at a price 25% lower than the current transportation natural gas raw material cost.

Based on retail prices in Seoul, the raw material cost for natural gas for hydrogen production in November will decrease from 16.8 KRW per megajoule (MJ) to 12.7 KRW. Adding the supply cost of 1.3 KRW respectively, the final price will be reduced from 18.1 KRW per MJ to 14.1 KRW.

The government plans to apply the price reduction measure temporarily for three years and will reconsider whether to extend it later, considering the pace of green hydrogen expansion.

An official from the Ministry of Trade, Industry and Energy said, "By securing the price competitiveness of hydrogen extracted using natural gas at an early stage before the spread of green hydrogen, we expect the distribution of hydrogen vehicles and the production and introduction of blue hydrogen to accelerate."

Additionally, the government decided to fully refund the import surcharge on liquefied natural gas (LNG) used as fuel for ships traveling between Korea and foreign countries when exported. The related amendment to the Petroleum Business Act Enforcement Decree and Enforcement Rules has been announced for legislation, and the review by the Ministry of Government Legislation is currently underway. The government plans to retroactively refund the exported volume starting from January 1 of this year once the legal amendment is completed. The current import surcharge is 24.242 KRW per kilogram.

An official from the Ministry of Trade, Industry and Energy stated, "Securing the economic feasibility of the domestic LNG bunkering business will provide an opportunity for Korea to take a leading position not only in eco-friendly ships but also in the LNG bunkering industry." He added, "The LNG fuel ecosystem can drastically reduce air pollutants compared to the existing oil fuel ecosystem, contributing to the transition to an eco-friendly economy."