South Korea’s Transition to a Hydrogen Economy: Strategic Positioning and Challenges in the Global Hydrogen Market by 2025
Editor
As of November 2025, the global hydrogen market has grown to an annual scale of $174 billion and is expected to exceed $300 billion by 2030, with an average annual growth rate of 9.2%. Amid this rapid growth, South Korea is working to solidify its position as a leading hydrogen economy through comprehensive investments and technological development in collaboration with the private sector. Notably, South Korea aims to introduce a clean hydrogen certification system through the revision of the Hydrogen Act in 2024 and expand the supply of clean hydrogen to 3 million tons by 2030. This ambitious plan aims to increase the current annual supply of 200,000 tons of clean hydrogen by 15 times.
The most notable area in South Korea’s hydrogen economy strategy is the hydrogen fuel cell vehicle (FCEV) market. As of 2025, Hyundai Motor holds a dominant 74.6% share of the global hydrogen passenger car market. Hyundai’s NEXO model sold 18,200 units worldwide in 2024, significantly outpacing Japan’s Toyota Mirai with 2,900 units and Germany’s BMW iX5 Hydrogen with 550 units. Hyundai plans to launch a next-generation hydrogen passenger car in the second half of 2025, targeting a maximum range of 800 km on a single charge. Importantly, Hyundai is also leading in the hydrogen commercial vehicle sector. Hyundai’s hydrogen truck, XCIENT, is operating over 1,600 units in Europe, with 47 units in Switzerland alone surpassing a cumulative driving distance of 5 million km.
In the hydrogen production sector, POSCO Holdings plays a key role. As of the end of 2024, POSCO produces 70,000 tons of by-product hydrogen annually and plans to expand its clean hydrogen production capacity to 500,000 tons by 2030. POSCO’s hydrogen production strategy consists of three main pillars: gray hydrogen production using by-product hydrogen from steelmaking processes, green hydrogen production using renewable energy, and blue hydrogen production by combining natural gas reforming with carbon capture and storage (CCS) technology. Notably, POSCO has decided to invest $2 billion in a renewable energy-based green hydrogen production project in the Pilbara region of Australia and plans to import 1.6 million tons of green ammonia annually to South Korea starting in 2027.
Analysis of Competitive Dynamics in the Global Hydrogen Market
Evaluating South Korea’s hydrogen economy strategy requires a comparative analysis with major competitors. Japan maintains a strong position as a pioneer in the hydrogen economy. Through its revised Basic Hydrogen Strategy in June 2023, the Japanese government aims to expand hydrogen supply to 3 million tons by 2030 and reduce the hydrogen price from the current 100 yen (approximately 900 KRW) per kg to 30 yen (approximately 270 KRW). Japan’s strength lies in its hydrogen infrastructure. As of 2025, Japan operates 174 hydrogen refueling stations nationwide, nearly double the 91 stations in South Korea. Additionally, Japan is ahead in the hydrogen power generation sector. Mitsubishi Power has commercialized a 30% hydrogen co-firing gas turbine and plans to complete a demonstration of a 100% hydrogen-dedicated turbine by the end of 2025.
Germany serves as the central axis of Europe’s hydrogen economy. The German government announced plans to expand electrolyzer capacity to 10 GW and increase hydrogen imports to 50-70 TWh by 2030 through its updated National Hydrogen Strategy in July 2023. Germany’s focus is on industrial hydrogen utilization. BASF, Germany’s largest chemical company, uses 160,000 tons of hydrogen annually at its Ludwigshafen plant and plans to increase this to 250,000 tons by 2030. Furthermore, Germany is leading in the construction of a hydrogen pipeline network. FNB Gas, a German gas management company, is progressing with the ‘H2 Core Network’ project to build a 9,700 km hydrogen-dedicated pipeline by 2032, investing 19.5 billion euros (approximately 28 trillion KRW).
China, though a latecomer to the hydrogen market, is rapidly catching up with its overwhelming economic scale. As of 2024, China’s hydrogen production amounts to 33 million tons annually, accounting for about 30% of global production. The Chinese government set goals to deploy 50,000 hydrogen fuel cell vehicles and establish 1,000 hydrogen refueling stations by 2025 through its mid-to-long-term hydrogen industry development plan announced in 2021. China’s strengths lie in its large-scale manufacturing base and cost competitiveness. China’s hydrogen fuel cell system price is around $400 per kW, significantly lower than South Korea’s $600 and Japan’s $800. Sinopec, China’s largest hydrogen company, operates 350 hydrogen refueling stations as of the end of 2024 and plans to expand to 1,000 stations by 2025.
The United States is accelerating hydrogen economy investments through the Biden administration’s Inflation Reduction Act (IRA). The IRA offers a tax credit of up to $3 per kg for clean hydrogen production, equivalent to 50-60% of current hydrogen production costs. The U.S. Department of Energy announced the selection of seven regional hydrogen hubs in October 2023, with $7 billion in federal funding allocated. The ARCHES (Alliance for Renewable Clean Hydrogen Energy Systems) hub in California is set to produce 600,000 tons of green hydrogen annually with $1.2 billion in support. The U.S. hydrogen strategy focuses on green hydrogen production utilizing large-scale renewable energy infrastructure.
Challenges and Opportunities in South Korea’s Hydrogen Economy
Several structural challenges exist in the development of South Korea’s hydrogen economy. The most significant issue is hydrogen production costs. South Korea’s current green hydrogen production cost is $6-8 per kg, more than double the target of $3. This is due to relatively high renewable energy generation costs and the electrolyzer efficiency still being at a commercial stage. South Korea’s renewable energy generation cost is 8-12 cents per kWh, significantly higher than the Middle East’s 2-3 cents or Australia’s 4-6 cents. As a result, South Korea is structurally reliant on overseas imports rather than self-sufficiency in hydrogen. The South Korean government plans to import 2.8 million tons (72%) of the 3.9 million tons of hydrogen demand by 2030, which could pose new risks in terms of energy security.
The pace of hydrogen infrastructure development is also lagging behind targets. The South Korean government presented a goal to establish 660 hydrogen refueling stations by 2030 in its 2022 Hydrogen Economy Implementation Basic Plan, but as of November 2025, only 91 stations are operational. Achieving the target requires the construction of 80-90 additional stations annually. The main reasons for the delay in hydrogen refueling station construction are high construction costs and complex permitting procedures. The construction cost of a hydrogen refueling station in South Korea is 3-3.5 billion KRW per station, higher than Japan’s 2.5 billion KRW and Germany’s 2 billion KRW. Additionally, complex regulations such as the City Gas Safety Management Act and the High-Pressure Gas Safety Management Act result in an average permitting period of 18 months, posing challenges to project implementation.
On the other hand, South Korea possesses unique strengths favorable to hydrogen economy development. First, world-class fuel cell technology. South Korea’s fuel cell system efficiency is 60%, surpassing Japan’s 55% and Germany’s 58%. Doosan Fuel Cell holds a 23% market share in the global fuel cell market as of 2024, ranking first, and has a dominant 45% share in the large-scale power generation fuel cell sector. Second, hydrogen carrier technology leveraging a strong shipbuilding industry. South Korea’s three major shipbuilders (Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering) account for 85% of global liquefied hydrogen carrier orders. Hyundai Heavy Industries has secured orders for 12 liquefied hydrogen carriers as of the end of 2024, each with a capacity of 1,250㎥, the largest in the world.
A particularly noteworthy success story in South Korea’s hydrogen economy is the Ulsan hydrogen city project. Ulsan City has been developing a hydrogen city since 2019 and currently operates 20 hydrogen buses, 40 hydrogen taxis, and 5 hydrogen cleaning vehicles. Ulsan boasts the highest density of hydrogen refueling stations nationwide with 8 stations. More importantly, Ulsan has established a complete value chain from hydrogen production to utilization. Ulsan’s annual hydrogen production is 170,000 tons, accounting for 85% of the national total, utilizing by-product hydrogen from petrochemical companies such as SK Energy, Lotte Chemical, and Hyundai Oilbank. Ulsan plans to expand hydrogen production to 250,000 tons by 2030 and construct three hydrogen fuel cell power plants (totaling 150 MW).
Another key element in South Korea’s hydrogen economy policy is the active investment by large corporations. SK Group announced plans to invest 18 trillion KRW in the hydrogen business by 2025, the largest scale among South Korean companies. SK E&S is constructing a 30 MW green hydrogen production facility in Incheon, aiming for operation in 2026. Lotte Chemical is pursuing a green hydrogen production project in Sarawak, Malaysia, with an annual capacity of 600,000 tons and a total investment of $3.7 billion. Hanwha Solutions is participating in the NEOM project in Saudi Arabia to construct a facility producing 1.2 million tons of green ammonia annually. These private investments lay the foundation for South Korea to play a key role in the global hydrogen supply chain.
From the second half of 2025, South Korea’s hydrogen economy is expected to reach a new turning point. The government plans to fully implement the clean hydrogen certification system, limiting the carbon intensity of hydrogen to 4 kg CO2/kg H2 and providing subsidies only for certified clean hydrogen. This is a strong policy signal to transition the existing gray hydrogen-centric supply structure to clean hydrogen. Additionally, South Korea plans to introduce a hydrogen co-firing power generation mandate from 2026, gradually increasing the hydrogen co-firing rate in large-scale gas power plants. Starting with 5% co-firing, the target is to reach 30% co-firing by 2035, expected to create an annual hydrogen demand of 1 million tons. For South Korea’s hydrogen economy to succeed, key tasks remain in reducing costs through technological innovation, establishing a stable supply chain through international cooperation, and expanding infrastructure through public-private collaboration. Particularly, reducing the hydrogen price to half of the current level, 4,000 KRW per kg, by 2030 is analyzed as the key to popularizing the hydrogen economy.
This article is a technology industry analysis report as of November 24, 2025. The content may change according to market conditions and technological advancements, and additional expert advice should be sought when making investment decisions.
