Accelerating the Truly Low-Carbon Hydrogen Transition in South Korea: Possible Policy Actions
There is an unprecedented opportunity for South Korea to remain a key low-carbon market player and climate leader though policy measures like the Clean Hydrogen Power Generation Bidding Market and the Clean Hydrogen Portfolio Standard. Ensuring that these policies favour truly low carbon and green hydrogen will be critical to realise this potential.
In May 2024, South Korea launched its first Clean Hydrogen Power Generation auction scheme which will allow power companies to enter into 15-year hydrogen purchase contracts. Bidders will be evaluated on the price of electricity and the emissions from the production of the hydrogen or ammonia procured. Maximum points will be awarded to hydrogen produced with less than 0.1kgCO2e/kgH2.
In the leadup to the launch of the auction scheme, the Green Hydrogen Organisation and its supporters prepared a paper proposing policy actions based on consultation with Korean industry and non-state actors interested in scaling up production and use of truly low-carbon and green hydrogen in South Korea and the Asia Pacific region. The paper seeks to support the Clean Hydrogen Power Generation Bidding Market and the Clean Hydrogen Portfolio Standard and draws on global and regional good practices to strengthen policy and financial incentives to bridge the ‘green premium’ gap and to create regulatory certainty and investor confidence.
These policy options presented reflect feedback from a broad range of industry and non-state stakeholders and emerging global good practices, including discussions with 50 Korean industry representatives at an industry roundtable in Seoul on 11 April 2024. The options include measures like competitive non-cost factors, rigorous emissions thresholds, sub quotas or separate bidding markets for green hydrogen, incentives and price support mechanisms. In the longer term, it could include ambitious demand-side measures and incentive schemes for hard-to-abate sectors. Some of these were reflected in the final Clean Hydrogen Power Generation Bidding Market. The paper and roundtable is an initiative of the APAC Green Hydrogen Alliance.