[The Lagging Hydrogen Economy] The US Dreams of Becoming a Hydrogen Exporter... Opportunities for Korean Companies to Enter the Market

Emerging as the Largest Clean Hydrogen Exporter in the US
Equipped with Abundant Renewable Energy and Infrastructure
Government Actively Supports, Expecting Synergy
"Must Collaborate on Strategic Alliances and New Business Development"

Editor's NoteHydrogen, the most abundant element on Earth, emits water when burned. With no greenhouse gas emissions, it is gaining attention as a new energy source in the carbon-neutral era. Countries around the world are making efforts to foster a hydrogen economy. South Korea was the first in the world to develop hydrogen vehicles and holds the highest adoption rate, but there is still a long way to go. Especially with the new government, concerns are spreading that hydrogen policies might be regressing. This article examines the role of hydrogen as a future energy source and the importance of policy support.

The California Public Utilities Commission (CPUC) approved a feasibility study on January 22 for the 'Angeles Link' project, which supplies green hydrogen to Los Angeles (LA). Angeles Link is a project that produces 3.1 million tons of hydrogen annually using 25?35 GW-class solar and onshore wind power and supplies it to the LA area. This can replace 23.8 million barrels of diesel annually. It is the largest hydrogen project in North America, led by Southern California Gas, a subsidiary of Sempra Energy, a U.S. power company.

Screenshot of Angeles Link screen

The United States is expected to emerge as the largest producer and exporter of clean hydrogen. Combining its natural environmental advantages, participation of private companies with innovative technologies, and active government support, it is making rapid strides toward becoming a hydrogen powerhouse. It is pointed out that Korean companies should seek business opportunities through strategic alliances with local hydrogen companies.

The U.S. is the second largest hydrogen consumer in the world after China. According to the International Renewable Energy Agency (IRENA), the U.S. consumed 11 million tons of hydrogen in 2020, accounting for 11% of global hydrogen consumption. With carbon-neutral policies in place, hydrogen demand is expected to explode in the future.

The U.S. has set a goal to reduce greenhouse gas emissions by 52% compared to 2005 levels by 2030. Accordingly, annual hydrogen demand is expected to increase more than fivefold to 56 million tons by 2050.

The U.S. already has a substantial industrial base to advance toward a hydrogen economy. The hydrogen pipelines connecting domestic refining, processing facilities, and petrochemical plants total 2,700 km, the most extensive pipeline network in the world. Hydrogen can be transported without additional costs. Additionally, it operates 15 ammonia and methanol terminals, considered hydrogen carriers, enabling hydrogen supply anywhere domestically and internationally.

Renewable energy essential for green hydrogen production is also abundant. Excluding forests and slopes where solar and wind power generation is difficult, 68% of the U.S. territory can produce eco-friendly electricity. Producing green hydrogen with electricity generated from this area could yield 2.6 billion tons annually. These are optimal conditions for producing hydrogen at a low cost.

The Biden administration is also showing strong commitment to fostering the hydrogen industry. Through the 'Hydrogen Shot' plan announced in June 2021, it is supporting hydrogen production technology with $64 million (approximately 81.3 billion KRW). The goal is to reduce the cost of clean hydrogen production to below $1 per kilogram within the next 10 years.

In addition, last September, the national clean hydrogen strategy roadmap was announced, establishing phased strategies to achieve 50 million tons of hydrogen production by 2050. The Inflation Reduction Act (IRA), implemented this year, provides up to $3 per kilogram for clean hydrogen and includes tax credits for hydrogen vehicles and fuel cells for power generation.

Hydrogen projects are actively underway across the U.S. Texas announced the 'Hydrogen City' project in March last year, planning to produce up to 2.28 million tons of green hydrogen annually based on up to 60 GW of solar and onshore wind power. The hydrogen will be delivered to local power plants and ammonia facilities via dedicated pipelines and is also aimed at export to potential importers such as Asia. Oil major ExxonMobil is considering a project to produce 870,000 tons of blue hydrogen annually using carbon capture and storage (CCS) technology at refining facilities.

Korean companies are also accelerating their entry into the U.S. hydrogen market, but concrete results have yet to materialize. Hyundai Motor Company and SK attended the largest North American hydrogen event, the 'Hydrogen and Fuel Cell Seminar,' recently introducing their hydrogen vehicle and fuel cell businesses. SK E&S is strengthening strategic cooperation with U.S. hydrogen companies such as Plug Power and Monolith, but mainly focusing on domestic projects.

Im Seon-ho, a researcher at the Korea Gas Corporation Economic Management Research Institute, said, "We need to expand collaboration for strategic alliances or new hydrogen business development with hydrogen companies experienced in the U.S."