Last November, a significant decision left many wondering. The renewable energy push took a step forward with the addition of green ammonia to the mix. However, local governments felt pressure from the Ministry of Climate to adjust projects to align with this new direction. The goal of providing affordable electricity now faces questions about costs and reliance on imports from China.
Recently, Gyeongbuk, Ulsan, and Chungnam were marked as special energy zones. This happened after significant requests from the Ministry of Climate to amplify green hydrogen projects. While the intention behind these zones is positive—expanding renewable energy—there are worries about the government’s heavy-handed approach. Critics argue that it could undermine the very reason these zones were created: to ensure low-cost electricity.
In December, Pohang, Ulsan, and Seosan were designated as special zones after a second look by the Energy Committee. Initially, these areas were denied this status in November without a clear reason. Meanwhile, regions that embraced renewable industries, like Jeju and Busan, were greenlit. This back-and-forth adds layers of complexity to the decision-making process.
Pohang had proposed using clean ammonia to supply carbon-free electricity to local battery firms but then shifted its plan to focus on green ammonia. Unlike blue hydrogen, which uses some fossil fuels in production, green hydrogen is made entirely from renewable energy. Ulsan and Seosan quickly followed suit, adjusting their proposals to include plans for carbon-free power. A local official explained that these changes were made at the ministry’s request.
However, this approach raises some red flags. Experts believe special zones should remain neutral and not favor one energy source over another. An academic in the field pointed out that there are no regulations demanding specific energy use in such zones. Furthermore, the high costs associated with green hydrogen could compromise the goal of offering cheaper electricity. According to BloombergNEF, blue hydrogen costs between $1.8 and $4.7 per kg, while green hydrogen ranges from $4.5 to $12—making it at least twice as costly.
If companies overly pivot toward green hydrogen and ammonia without the needed infrastructure, supply chain issues could arise. For example, Pohang has plans to launch a green ammonia project in 2027 but may need to import the product due to high local costs. Professor Yoo Seung-hoon from Seoul National University highlighted that currently, China is the only nation producing green hydrogen and ammonia at prices competitive with fossil fuels. This could echo past challenges where South Korea became overly reliant on specific imports.
Ultimately, special energy zones offer a promising avenue for innovation. These zones allow renewable energy providers to sell electricity directly to consumers, bypassing traditional channels like KEPCO, potentially lowering prices and enabling new energy initiatives. Yet, as we move forward, balancing costs and dependencies will be crucial for sustainable growth.
