[Choi Ji-woong's Energy War] Australia and Middle East's Hydrogen Powerhouse Dream... Korea Must Join with Its Technology

Australia Develops Green Hydrogen Based on Vast Land
Constructing Mega Renewable Energy Complex
Hydrogen-Producing Countries Show Strong Commitment


Middle East Extracts Blue Hydrogen from Natural Gas
Saudi Arabia Develops Mega Gas Fields
130 Trillion Won Astronomical Investment


Korea Advances Hydrogen-Ammonia Co-Firing Power Generation
Offsetting Environmental Disadvantages Through Technological Superiority in Hydrogen Fields

Asia Economy Newspaper publishes a monthly series every Thursday titled 'Choi Ji-woong's Energy War,' diagnosing the energy industry undergoing a great transformation and examining the related changes in the international order. The author is an expert in the energy field who joined Korea National Oil Corporation in 2008, worked in the Europe and Africa Business Division and the Stockpile Business Division, and completed an MBA program in Oil and Gas at Coventry University in London in 2015. He authored the bestseller 'How Oil Rules the World,' which covers the modern history of oil.

The most ideal method of obtaining hydrogen is green hydrogen, produced by electrolyzing water using renewable energy sources such as solar and wind power. Green hydrogen is the only type that emits no carbon. Blue hydrogen, which captures and stores carbon emitted during production, is also considered clean hydrogen but is less environmentally friendly than green hydrogen. Therefore, large-scale production of green hydrogen is essential for realizing a hydrogen economy.

Renewable energy is required to produce green hydrogen. However, renewable energy demands vast land, abundant sunlight, and strong winds. Australia is the country best suited to these conditions. Australia shows strong commitment to the hydrogen business. In May 2021, Alanna McTiernan, the Minister for Hydrogen of Western Australia, announced plans to secure 200 GW of renewable energy generation capacity by 2040 and use it for green hydrogen production. Currently, Australia's total power generation capacity is about 70 GW, so this means constructing renewable energy facilities about three times the current capacity within 20 years.

Australia's dream of becoming a hydrogen powerhouse stems from its vast land area. Australia covers 7.69 million km², which is 77 times the size of South Korea's approximately 100,000 km². However, its population is about 26 million, roughly half that of Korea. Since renewable energy generation depends on land area, Australia holds an overwhelming comparative advantage in renewable energy generation conditions. It has the potential to produce several times the required electricity solely from renewable energy. However, renewable energy itself cannot be exported. Therefore, it must be converted into an exportable form. This is where hydrogen as an 'energy carrier' is needed. Australia aims to build mega renewable energy complexes domestically and become a hydrogen oil-producing country by mass-producing green hydrogen. This is a natural plan for Australia, which meets all the conditions necessary for utilizing renewable energy.

However, Australia's green hydrogen production may take quite some time. Renewable energy generation facilities and water electrolysis plants are not yet complete. For the time being, blue hydrogen extracted from natural gas will inevitably be the main hydrogen source. Currently, blue hydrogen production costs are about 25-30% of green hydrogen costs. In fact, blue hydrogen is a modified product of natural gas with carbon removed. Therefore, the Middle East countries with abundant natural gas production, such as Saudi Arabia, Qatar, and the UAE, are emerging as centers of blue hydrogen production. Saudi Arabia is developing a mega gas field with an astronomical investment of $110 billion (about 130 trillion KRW). Most of the gas produced there will be used for hydrogen production.

▲ Researcher at Korea National Oil Corporation Smart Data Center

Both Australia and the Middle East are advancing their businesses with an eye on expanding the Asian market. Meanwhile, Korea announced in November 2021 its '1st Basic Plan for Hydrogen Economy Transition,' pledging to supply 27.9 million tons of hydrogen annually by 2050, all of which will be 100% clean hydrogen (blue hydrogen + green hydrogen). Of the hydrogen supply, 20% will be domestically produced, 40% produced overseas including Australia, and the remaining 40% imported. If this proceeds as planned, hydrogen will surpass oil as Korea's largest energy source by 2050.

One of the keys to realizing a hydrogen economy is the advancement of transportation technology. Hydrogen must be liquefied like LNG to reduce its volume for transport. Liquefied hydrogen's volume shrinks to 1/800th, enabling large-scale transport. For hydrogen to be widely used, liquefied hydrogen carriers are essential. However, currently, only one liquefied hydrogen carrier has been built in Japan, and mass production in a short period is difficult. At this point, ammonia becomes necessary. For the time being, hydrogen (H) will likely be transported combined with nitrogen (N) as ammonia (NH3), then hydrogen will be extracted again or ammonia will be used directly.

The Korean government declared December last year as the inaugural year of hydrogen-ammonia co-firing power generation and expressed its ambition to become the world's number one hydrogen-ammonia power generation country. Co-firing power generation involves using hydrogen and ammonia mixed with LNG or coal. In environments unfavorable for renewable energy generation, importing hydrogen and ammonia as fuel for power generation may be the most rational strategy. Above all, it reduces the burden of constructing large-scale renewable energy facilities in a country with limited land.

As the share of hydrogen-ammonia power generation grows, the need to stockpile ammonia for energy security increases. Even if hydrogen power generation expands, due to difficulties in hydrogen storage, ammonia is likely to be adopted as the storage medium. Renewable energy generation, which will expand in the future, fluctuates depending on weather, so stockpiling power sources like ammonia becomes key to energy security. Therefore, it is necessary to actively utilize Korea National Oil Corporation's expertise in oil stockpiling for ammonia import and storage.

Going forward, what matters is securing a large share in the hydrogen value chain with technology superior to that of hydrogen-producing countries. Above all, lowering costs is crucial, and this is not only the producers' issue but also requires the technological capabilities of consumers. A major reason Middle Eastern oil-producing countries in the last century had to entrust their oil development to Western oil companies and share profits was that Western companies had pioneering and excellent exploration and development technologies early on. Korea needs a strategy to offset its disadvantage in land area with technological superiority in various hydrogen fields. The second Middle East boom and the first Australia boom will appear in hydrogen.