"To Align with Government Policy"
Potential Conflict with 2040 Coal Phase-Out
Companies Preparing for Bidding Thrown into Turmoil
Concerns Grow over Increasing Energy Policy Uncertainty
Kim Sung-hwan, Minister of Climate, Energy and Environment, is responding to a lawmaker's question at the National Assembly's Climate, Energy and Environment Committee hearing held in Yeouido, Seoul on October 14, 2025. Photo by Yonhap News
The Ministry of Climate, Energy and Environment abruptly canceled the deadline for the Clean Hydrogen Power Generation Bidding (CHPS) that was scheduled for October 17. The ministry explained that this decision was made to ensure consistency with the government's plan to phase out coal-fired power plants by 2040. Energy companies, including power generation firms that had spent the past year preparing for the bidding, were thrown into turmoil. Concerns are also mounting that policy uncertainty in the energy sector is increasing under the new administration.
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On October 17, the Korea Power Exchange, which oversees the Clean Hydrogen Power Generation Bidding, announced the cancellation of the competitive bidding for the clean hydrogen power market. The stated reason for the cancellation was "to replace it with a new announcement."
Regarding this, an official from the Korea Power Exchange explained, "Following the meeting of the Hydrogen Power Generation Bidding Market Committee held today, we decided that it would be better to cancel the bidding for now in order to ensure alignment with government policy."
Alignment with government policy refers to the national agenda of closing all coal-fired power plants by 2040. An official from the Ministry of Climate, Energy and Environment stated, "If coal-fired power plants are closed in 2040, there could be sustainability issues with coal-ammonia co-firing power generation, so I understand that the relevant committee decided to cancel the bidding for now."
Clean hydrogen power generation refers to the production of electricity using fuel recognized as clean hydrogen (or clean ammonia) by an accredited institution. This includes coal-ammonia co-firing power generation and liquefied natural gas (LNG)-hydrogen co-firing power generation.
The Ministry of Trade, Industry and Energy launched the clean hydrogen power generation bidding market for the first time last year. Companies wishing to participate in the bidding must prove, through pre-consulting with the Korea Energy Economics Institute, the certification body, that they can secure clean hydrogen (or ammonia). The government plans to gradually transition to full hydrogen power generation through the clean hydrogen power generation bidding system.
The main issue lies with coal-ammonia co-firing power generation. Companies selected in this year's bidding are required to begin operations after a grace period of up to four years. In this scenario, coal-ammonia co-firing power generation could continue until 2043 or 2044. This would result in coal-fired power plants continuing to operate even after the 2040 coal phase-out, which is a key national agenda item of the Lee Jaemyung administration.
The Ministry of Climate, Energy and Environment and the Korea Power Exchange announced plans to form a working group, gather industry feedback, and issue a new bidding announcement within the year. Considering the 2040 coal phase-out, the new announcement may limit the operation period of power plants to 2040. In that case, coal-ammonia co-firing may be excluded from the bidding due to lack of economic viability. Environmental groups have long raised concerns about greenhouse gas emissions from coal-ammonia co-firing power generation. Conditions for LNG-hydrogen co-firing power generation may also become more stringent.
Although the government cited alignment with its national agenda as the reason, companies that had spent the past year preparing for the clean hydrogen power generation bidding were unable to hide their confusion. An energy industry official stated, "We were taken aback by the cancellation notice on the day of the bidding deadline and are now discussing how to respond going forward." The energy sector is increasingly concerned about growing policy uncertainty regarding hydrogen policy under the new administration.
An official from the Ministry of Climate, Energy and Environment said, "We understand that no companies had submitted their bids by the time the cancellation notice was issued," and added, "Please understand that this was an unavoidable measure to prevent even greater confusion that could have arisen after the bidding process began." A Korea Power Exchange official stated, "We are explaining the situation and expressing our apologies to those making inquiries."
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