[Exclusive] Hydrogen Refueling Station War Intensifies... US, China, and Japan Pouring Subsidies

US Offers Tax Credits for Hydrogen Stations
Japan Provides Support Up to 450 Million Yen
China Also Offers Operating Subsidies

Korea's Subsidies Remain Around 3 Billion Won for 4 Years
Stations Operate at a Loss Due to Insufficient Support
Industry Cries Out, "Subsidies Must Be Expanded"

A hydrogen charging station located near the National Assembly in Yeongdeungpo-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

The background behind the government's initiative to reform hydrogen refueling station subsidies lies in the global competition surrounding eco-friendly vehicles. Competitor countries such as the United States and Japan are investing massive budgets into subsidies for hydrogen refueling stations to capture the hydrogen vehicle market. China is even providing operational costs for private companies' refueling stations, openly supporting the industry. To avoid losing market leadership, voices are emerging that South Korea must raise the stagnant hydrogen refueling station subsidies that have remained unchanged for years.

According to a comprehensive report by Asia Economy on the 6th, the Ministry of Environment plans to reform the subsidy system for hydrogen refueling stations to promote their efficient distribution. Considering the diversified mobility market, the plan is to subdivide the types of subsidies for hydrogen refueling stations from 3 to 7 categories. The Ministry of Environment commissioned a research project through the Korea Environment Corporation last September containing these details and received the results last month, currently coordinating the specifics.

The government is focusing on hydrogen refueling station subsidies because charging infrastructure plays a decisive role in the distribution of eco-friendly vehicles. As of December last year, the nationwide number of hydrogen vehicles was about 34,000. However, there are only 275 refueling stations, meaning that, on average, one station is responsible for 123 hydrogen vehicles. Without public sector subsidies to expand charging infrastructure, the distribution of hydrogen vehicles is practically impossible.

An official from the Korea Environment Corporation explained, "By subdividing the subsidies, support will be provided to types of hydrogen refueling stations that previously did not receive funding."

From Tax Credits to Operational Support... Global Competition in the Hydrogen Market

Major countries are already pouring substantial subsidies into hydrogen refueling stations. The United States established the 'National Clean Hydrogen Strategy and Roadmap' in June last year. The core goal is to increase annual clean hydrogen production from 10 million tons in 2030 to 50 million tons by 2050. For hydrogen refueling stations, a tax credit of up to $3 per kilogram of clean hydrogen is provided, and companies investing in hydrogen fuel cell infrastructure receive tax credits of up to 30% of their costs.

Japan offers subsidies for hydrogen refueling stations up to 450 million yen (approximately 416 million KRW), which is higher than South Korea's maximum subsidy of 3 billion KRW per station. The types of subsidies are also more advanced. Japan provides subsidies ranging from 100 million to 130 million yen for mobile and small-scale hydrogen refueling stations, which do not exist in South Korea. In particular, subsidies are given not only for installing hydrogen refueling stations but also for on-site hydrogen production devices, liquefied hydrogen facilities, lane expansions, and remote monitoring equipment.

China does not have national-level subsidies but local governments provide operational cost support. According to the China Hydrogen Industry Association, Beijing offers 5 million yuan (approximately 940 million KRW) for hydrogen refueling stations with a capacity of 1,000 kg or more, and 2 million yuan for those with 500 kg or more. If hydrogen is sold below 30 yuan per kilogram, an additional operational subsidy of 10 yuan per kilogram is provided. The more hydrogen sold cheaply, the more subsidies are received. Hubei Province also provides support of 1.5 million yuan, but if the selling price is below 35 yuan, an additional operational subsidy of 8 yuan per kilogram is given.

Competitor countries' hydrogen vehicle distribution targets far exceed South Korea's. South Korea's cumulative hydrogen electric vehicle distribution target by 2030 is 300,000 units regardless of model. In contrast, Japan plans to distribute 800,000 passenger cars alone. The United States aims for 1.2 million units, and China 1 million. Even the Netherlands, with relatively smaller subsidies, plans to distribute 303,800 units including passenger cars, buses, and freight vehicles. Considering South Korea's smaller domestic market size, this difference is inevitable, but warnings are emerging that Korea could be completely left behind in future competition.

Signs that South Korea is falling behind in the hydrogen vehicle competition are already appearing. According to energy market research firm SNE Research, global hydrogen vehicle sales in the first quarter of this year were 2,382 units. Last year, Hyundai Motor Company held the top market share, but this year it lost first place to Toyota. Although Toyota's hydrogen vehicle sales decreased by 4.2% to 868 units, Hyundai's sales plummeted by 66.2%, selling only 691 units.

Hydrogen Refueling Stations Operating at a Loss... "Subsidy Scale Must Also Be Expanded"

The industry believes that beyond subdividing subsidies, the overall scale must increase. South Korea's hydrogen refueling station subsidy is capped at 3 billion KRW for the standard type. It was raised once from 1.5 billion KRW in 2021 to 3 billion KRW but has remained unchanged for four years. Although the national subsidy ratio has slightly increased, the costs of building refueling stations have also risen, leading operators to argue that the support level is insufficient. An industry official from a hydrogen refueling station, who requested anonymity, said, "The current subsidies are based on installation costs from several years ago," adding, "For large hydrogen refueling stations, the subsidies are far too low."

Some hydrogen refueling stations are already operating at a loss. Although there is a system where the government subsidizes up to 80% of the deficit, the regulations are strict, making it difficult to receive the maximum amount, and rent, which accounts for the majority of costs, is not compensated. A representative from the Hydrogen Convergence Alliance, a public-private consultative body aiming to revitalize hydrogen distribution, explained, "Compared to the government's roadmap, the number of hydrogen vehicles distributed is low," adding, "Hydrogen refueling station operators inevitably run deficits because fixed expenses such as electricity bills, fuel purchase costs, and labor costs continue to occur."

The government is also keeping discussions on hydrogen refueling station subsidies open. A Ministry of Environment official said, "It is true that there have been many requests from the hydrogen vehicle industry to increase refueling station subsidies," and added, "We are considering commissioning an additional study next year to determine the actual costs involved in installing refueling stations." This means they intend to review whether to raise subsidies after verifying if the construction costs of hydrogen refueling stations have indeed increased, as the industry claims.

Experts emphasize that to avoid losing leadership in the global eco-friendly industry, domestic subsidy policies must be expanded comprehensively. Professor Kim Dae-jong of the Department of Business Administration at Sejong University pointed out, "The entire world, including China, is looking at the future of eco-friendly vehicles and providing subsidies for infrastructure distribution," adding, "Ultimately, eco-friendly vehicles must be sold and refueling stations must be established in the domestic market to lead the global market."