Korean gov’t to double hydrogen bus subsidies for next year

Hyundai Motor Co.’s hydrogen bus, Elec City. [Courtesy of Hyundai Motor]

The South Korean government is planning to double next year’s budget for subsidizing the purchase of hydrogen buses in an effort to expedite the establishment of a hydrogen ecosystem, a key energy source for the next generation.

According to the government and multiple industry sources on Wednesday, the Ministry of Environment has submitted a budget for hydrogen bus subsidies that is more than twice the level of this year to the Ministry of Economy and Finance.

This year, the Environment Ministry granted a subsidy of 162 billion won ($124.8 million) to 700 buses, including 400 city buses and 300 intercity buses.

The ministry plans to subsidize the purchase of 1,500 hydrogen buses next year, more than twice as many as this year.

Accordingly, it has applied for a budget of more than 340 billion won. The government budget will be released for deliberation by the National Assembly before September.

Local companies building a hydrogen ecosystem are expecting their effort to take speed with increased sources of hydrogen use.

Global consulting firm Deloitte LLP projects the global blue and green hydrogen market to grow to 182 trillion won by 2050.

Hydrogen has the advantage of minimizing carbon emissions by utilizing carbon capture (CCS) technology in the production process. It is also easy to use when it is difficult to store electricity directly due to high battery prices.

Hyundai Motor Group and SK Group are known to be most aggressive in building the hydrogen ecosystem. Hyundai Motor Group is intent on building an ecosystem centered on hydrogen commercial vehicles and liquefied hydrogen plants while SK Group on charging stations.

Hyundai Motor Co. currently sells hydrogen bus, the Elec City, at home and abroad. It also sells the hydrogen passenger car NEXO but sales have been weak due to a lack of hydrogen infrastructure and delays in launching new models.

“Electric vehicles have emerged as the mainstream in the passenger car market,” said an official from the industry. “A greater proportion of commercial vehicles that need to travel longer distances and carry heavy loads are expected to shift to hydrogen cars.”

South Korean Minister of Environment Han Wha-jin, third from left, visits SK E&S Co.’s liquefied hydrogen plant in Incheon, on Aug. 2. [Courtesy of SK E&S]

The Ministry of Environment is also planning to shift the focus of next year’s hydrogen vehicle subsidies to commercial vehicles such as buses while reducing the budget for passenger vehicles from this year.

The rise of Chinese-made electric buses is also a reason for accelerating the spread of hydrogen buses.

According to the Korea Automobile & Mobility Association, Chinese electric buses accounted for 44 percent of the domestic electric bus market last year, up from 24 percent in 2019, 33 percent in 2020, and 38 percent in 2021.

While electric buses take an hour to fully charge, hydrogen buses that use liquefied hydrogen can be fully charged in 20 minutes and can travel 635 kilometers on a single charge.

Hyundai Motor is also set to expand hydrogen bus production to keep pace with the growing demand.

By the end of this year, the company plans to increase production of hydrogen buses by expanding facilities for eco-friendly commercial vehicles and significantly improve the durability of hydrogen buses.

It will also introduce hydrogen cleaning trucks for public institutions this year and supply mid-sized 5-ton and large 10-ton hydrogen trucks starting next year.

SK E&S Co., in the meantime, is engaged in the production of liquefied hydrogen and construction of charging stations. The company is building the world’s largest liquefied hydrogen plant with an annual capacity of 30,000 tons.

Hydrogen cooled to minus 253 degrees Celsius is one-800th the volume of hydrogen at room temperature, which is easier to be transported in large quantities and faster to charge than gaseous hydrogen.

SK E&S will begin operations of hydrogen refueling stations in Korea at the end of this year in collaboration with global hydrogen company Plug Power Inc.

The Ministry of Environment also plans to secure 320 hydrogen refueling stations nationwide by the end of this year and increase the number to 660 by 2030.