The South Korean government has vowed to “expand tax support” for clean hydrogen, hinting that it will introduce production tax credits modelled after those in the US.

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In a statement at the quasi-governmental Hydrogen Economy Committee in Seoul, Prime Minister Han Duck-soo — the country’s deputy leader — said that H2 was a “carbon-free energy that can simultaneously respond to climate change and [help Korea] achieve economic growth”.

“The government will specify action plans and promote them with greater speed so that the hydrogen economy and industrial development can begin in earnest,” he declared.

“Major countries such as the US and [those in] the EU are quickly promoting the hydrogen economy through hydrogen production and investment tax credits and clean hydrogen certification systems to secure global leadership in the hydrogen economy.

“Our government is also concentrating its policy capabilities on establishing mid- to long-term policies for the hydrogen economy, designating it as a national strategic technology, expanding tax support, and laying the foundation for a clean hydrogen certification system in order to lead the world's best hydrogen economy.”

He added that the government will ensure a steady supply of hydrogen to the domestic market, whether that be produced locally or imported from abroad.

“We will strengthen support for technology development and verification to expand domestic production of clean hydrogen using nuclear power plants and renewable energy,” he said.

“To strengthen support and secure a stable supply chain, we will also actively secure overseas production bases led by our technology and capital.”

South Korea has previously said it wants its companies to produce low-cost green hydrogen in countries with strong winds and sunshine, as well as available land, in order to supply its domestic markets.

The Hydrogen Economy Committee — which consists of government ministers and business leaders — also agreed on a clean hydrogen certification system that will be introduced next year.

This system bears a strong resemblance to the tiered set-up of the US hydrogen production tax credit, with four “grades” of clean hydrogen according to lifecycle greenhouse gas emissions (from raw-material mining to hydrogen production).

Grade 1 is for each kilo of H2 made with less than 0.1kg of CO2-equivalent (CO2e); Grade 2 is 0.1-1kgCO2e/kgH2; Grade 3 is 1-2kgCO2e/kgH2, with Grade 4 set at 2-4kgCO2e/kgH2.

The government has not stated why it has set these grades, but coupled with the open comparison with the US tax credits, it seems likely that they have been created for a yet-to-be-announced tiered support system.

The US Inflation Reduction Act offers hydrogen production tax credits according to emissions intensity, as follows:

45V tax credits tiered by emissions intensity

Emissions intensity (kgCO2e/kgH2) Maximum tax credit ($/kgH2)
0-0.45
$3.00
0.45-1.5
$1.00
1.5-2.5
$0.75
2.5-4
$0.60

Source: US Department of Energy

The committee also agreed to provide “support” for hydrogen materials, parts and equipment, including electrolysers, road vehicles, filling stations, fuel cells and “liquid hydrogen transport ships”, although the exact nature of this support was not spelled out.

South Korea has previously announced plans to supply 300,000 hydrogen vehicles — including 21,200 buses — and more than 660 hydrogen filling stations by 2030.

There are currently about 35,000 H2-powered vehicles on Korean roads today, and 160 hydrogen fuelling stations.

Meeting such targets seem unlikely, given that the popularity of hydrogen cars is declining amid recent fuel price hikes and supply problems.