HIGHLIGHTS

 A certification rating system for clean hydrogen will be implemented starting in 2024; therefore, it is necessary to prepare the certification criteria. A clean   hydrogen certification system is crucial not only to achieve carbon neutrality, but also to establish an economic ecosystem centered on clean hydrogen and   contribute to the development of the national economy by fostering the hydrogen industry. In order to achieve the goal of a clean hydrogen certification system,   this issue brief proposes the following certification criteria: 

 1. Like the Renewable Portfolio Standard, the clean hydrogen certification system should be adjusted every 3 years and consider the emission factors of certified   clean hydrogen (i.e., the level of clean hydrogen technology) and national greenhouse gas (GHG).  

 2. The certification criterion for 2024, the first year of the clean hydrogen certification system, should be set to 41.5 g MJ-1 (5.0kg CO2-e kgH2-1), which is the   expected national GHG emission factor in 2026. 

 3. The clean hydrogen certification system boundary should be set to “cradle to gate” or “well to gate,” analogous to international cases including the European   Union, Japan, and China.  

 4. Certification criteria should be established for international trade to include imported hydrogen in the clean hydrogen certification system. 

1. Background

The clean hydrogen certification rating system (hereinafter referred to as clean hydrogen certification system) specified in the Hydrogen Economy Promotion and Hydrogen Safety Management Act (hereinafter referred to as the Hydrogen Act) , amended in June 2022, is linked to the mandatory sales and use of clean hydrogen. It is expected to have a significant impact on key national industries that seek to use hydrogen to achieve carbon neutrality in the future, such as electricity and steel, as well as on hydrogen-related industries. In South Korea, progress on the clean hydrogen certification system was shared at the Clean Hydrogen Trade Initiative Forum in 2022 . Countries and polities that have disclosed clean hydrogen certification systems, including the European Union (EU), have considered the social and economic importance of such systems, and they have gone through the process of encouraging stakeholder participation and accepting their opinions from the start. Hence, to promote discussion among stakeholders, this issue brief presents directions for establishing clean hydrogen certification criteria, which are the core of the clean hydrogen certification system, from the perspective of carbon neutrality.

2. Purposes of the Clean Hydrogen Certification System 

Based on the reasons for the enactment and amendment of the Hydrogen Act, the purposes of the clean hydrogen certification system are to contribute to carbon neutrality using clean hydrogen and to build an economic ecosystem centered on clean hydrogen. Therefore, the emission criteria and system boundary of the clean hydrogen certification system should satisfy all three of the following criteria: 

 1.Contribution to carbon neutrality using clean hydrogen.

 2.Contribution to building an economic ecosystem centered on clean hydrogen.

 3.Implementation of a hydrogen economy and promotion of national economic development by fostering the hydrogen industry. 

3. Emission Criteria for Clean Hydrogen Certification

In order for the clean hydrogen certification system to contribute to a primary goal of carbon neutrality, the following conditions must be satisfied. First, the clean hydrogen certification criteria must be lower than the national greenhouse gas (GHG) emission factor , and the criteria must be strengthened according to a decrease in total national GHG emissions. In addition, if a certain percentage (e.g., 90%) of the upper portion of the emission factor is set as the minimum certification criterion for clean hydrogen certified within the last certification period, competition among clean hydrogen technologies may encourage technology development and rapid emission reduction. To satisfy the abovementioned conditions, the clean hydrogen certification system should minimize policy uncertainty by sharing step-by-step reinforcement criteria and long-term plans and should be designed in a technology-neutral way to encourage the introduction of new technologies. Therefore, we propose to adjust the clean hydrogen certification criteria every 3 years, as the Renewable Portfolio Standard does, and decide by considering the emission factor of certified clean hydrogen (i.e., level of clean hydrogen technology) and the national GHG emission factor. 

The emission factor criterion of the clean hydrogen certification system would be 56.5g MJ-1, the quotient of the total GHG emission (727.7Mt CO2e) in 2018, the base year of carbon neutrality goal, divided by the total energy supply (307Mtoe) in the same year. The GHG emission factor criterion for 2030 is 34g MJ-1, which is 60% of the 2018 value, according to the GHG reduction goal (40% reduction by 2030 compared to 2018). In 2050, by setting 0g MJ-1, each year’s emission factor criterion may be obtained by connecting each value with a straight line in order. Based on this, the certification criterion at the time of the clean hydrogen certification system’s introduction in 2024 can be set as 41.5g MJ-1 (5.0kg CO2-e kgH2-1), which is the expected national GHG emission factor in 2026. This value is about 27% lower than the emission factor of the base year (2018) and about 57% lower than the GHG emission factor of off-site hydrogen extraction . Although the certification criterion at the time of introduction is high compared to the EU’s CertifHy GO , the clean hydrogen certification criterion adjustment in 2027, three years later, will be 35.8 g MJ-1 or lower based on the national GHG emission factor in 2029, the last year of the certification validity period. A lower certification criterion may be determined depending on the level of clean hydrogen production technology. 

If the certification criteria are set as in Figure 1, position ①, the clean hydrogen certification criteria become higher than the national GHG emission factor after a certain point, such that the use of clean hydrogen increases GHG emissions. In contrast, if the certification criteria are strengthened as in position ②, there is an advantage in terms of reducing GHG emissions, but policy flexibility may be reduced. 

4. System Boundary for Clean Hydrogen Certification

The clean hydrogen certification system takes the form of a “guarantee of origin”, which is proposed to promote the sales and use of clean hydrogen by hydrogen fuel supply facility operators based on GHG emission information at the production and import stages. Therefore, we propose that the system boundary of clean hydrogen certification system should be “cradle to gate” or “well to gate ” (Figure 2). This system boundary not only meets the goal of a guarantee of origin but is advantageous for securing compatibility in international trade, since polities such as the EU, Japan, and China have adopted it (Korea Energy Economics Institute, 2021). Moreover, since the production and distribution of hydrogen are normally separated in South Korea, calculating emissions within the decision-making range of producers would satisfy the goal of a guarantee of origin. 

Since South Korea is expected to be highly dependent on imported hydrogen, certification criteria for emissions should be prepared in accordance with the criteria for hydrogen produced abroad. Unlike domestically produced hydrogen, whose system boundary is distribution from production plants, the system boundary of imported hydrogen should be the stage immediately before import into the domestic distribution network, assuming that the importers are producers. In order to expand the system boundary to imported hydrogen, international certification criteria for emissions are a prerequisite to trading clean hydrogen internationally. Currently, both the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE, 2022), in which about 20 polities including the EU, USA, Australia, and Japan as well as South Korea participate, and the Clean Hydrogen Supply Chain Initiative centered on South Korea are discussing this issue. Therefore, by establishing a domesqyU6bbDsWwotic hydrogen certification rating system that includes imported hydrogen, efforts are necessary to lead discussions that reflect international trade standards and to secure an advantageous position in the global supply chain in the future. Until the international agreement is prepared, the emission certification criteria can be calculated based on the 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories (IPCC, 2019) or the National Inventory Submissions (UNFCCC, 2022). 

5. Conclusion: Clean Hydrogen Certification Criteria Should Aim for Carbon Neutrality

A properly designed clean hydrogen certification system will contribute to carbon neutrality, as well as the growth of a hydrogen economy by establishing an economic ecosystem based on clean hydrogen. In particular, since the certification criteria of the clean hydrogen certification system inevitably influence how the hydrogen-related industry directs its facility investment and business, encouraging discussions among stakeholders on this topic is important. Therefore, based on the major goal of carbon neutrality using clean hydrogen and the goal of establishing a hydrogen-economy ecosystem centered on clean hydrogen, this issue brief has suggested initial clean hydrogen certification criteria (41.5g MJ-1), a long-term plan to strengthen certification criteria, and a way to establish the system boundary. We hope that this issue brief will help promote sound discussions among stakeholders about the clean hydrogen certification system and ensure the direction of a carbon-neutral hydrogen economy using clean hydrogen in the long run.