Russia’s Policy Transition to a Hydrogen Economy and the Implications of South Korea–Russia Cooperation

Abstract

Leading countries are developing clean energy to replace fossil fuels. In this context, Russia is changing its energy policy towards fostering new energy resources, such as hydrogen and helium. Hydrogen will not only contribute to Russia’s financial revenue by replacing natural gas, but will also provide a basis for it to maintain its dominance over the international energy market by pioneering new energy markets. Russia is aiming to produce more than two million tons of hydrogen fuel for export to Europe and Asia by 2035. However, it is facing many challenges, including developing hydrogen fuel storage systems, acquiring the technology required for exporting hydrogen, and building trust in the fuel market. Meanwhile, South Korea has a foundation for developing a hydrogen industry, as it has the highest capacity in the world to produce fuel cells and the ability to manufacture LNG: (liquefied natural gas) carriers. Therefore, South Korea and Russia have sufficient potential to create a new complementary and reciprocal cooperation model in the hydrogen fuel field. This study examines the present and future of Russia’s energy policy in this area as well as discusses South Korea and Russia’s cooperation plans in the hydrogen fuel sector and the related implications.

1. Introduction

Recently, interest in the hydrogen industry has been rising globally. Europe’s ‘green’ initiative already obligates natural gas suppliers to consider improving the environmental friendliness of raw materials. According to the optimistic estimation of the Hydrogen Association, the share of hydrogen in energy consumption in 2050 will be 18%. Other experts predict that hydrogen will occupy 12–19% of the energy market in the United Kingdom, United States, and European Union [1].

Recognizing the importance of the hydrogen industry, Russia also issued the Order of the Russian Federation Government No. 2162-p on 5 April 2021 to integrate and complement scattered hydrogen-related policies. In addition, the Russian government presented long-term strategies for the development of the hydrogen economy by 2050.Russia establishes long-term national strategies for energy policies that have a critical impact on the country’s economy in five-year units. The energy policy most recently established in July 2020 shows the direction of Russian energy policy from 2020 to 2035.The main policy directions in Russia’s Energy Strategy 2035 report can be summarized into three strategies. The first strategy is to make the most of the current major energy sources of Russia, such as crude oil, natural gas, coal, and nuclear power. This is due to the country’s need to continue to centre energy development policy on crude oil and gas to maintain its strong position in the global energy market. The second strategy is to promote export expansion into the Asian market instead of the existing Western market, while strengthening Russia’s position in the global energy market. In the same report, Russia presents the goal of producing more than two million tons of hydrogen and exporting it to Europe and Asia by 2035.

The third strategy is related to renewable energy, which is rarely mentioned. Russia’s Energy Strategy 2035 suggests a change in energy policy to foster new energy sources, such as hydrogen and helium, as strategic export resources, moving away from traditional energy resources centred on petroleum, gas, and petrochemicals in the mid to long term. Since approximately three-quarters of hydrogen fuels are produced from natural gas, it is only natural that Russia, which has a high production of natural gases and high dependence on the exports of energy resources, is taking an interest in the hydrogen fuel industry, which will become a new global energy source. Russia believes that hydrogen will not only contribute to national finances by replacing natural gas but will also provide a foundation for maintaining Russia’s dominance over the international energy market by pioneering new energy markets.

However, Russia still has insufficient industrial conditions for utilizing hydrogen. It is facing many challenges, including developing hydrogen fuel storage systems, acquiring the technology required to export hydrogen, and building trust in international society to supply hydrogen to Europe, South Korea, and Japan. On the contrary, South Korea has the highest capacity in the world to produce fuel cells and can also manufacture LNG carriers (to be changed into hydrogen carriers). Therefore, cooperation between South Korea and Russia in the hydrogen industry could create a mutually complementary business model in the future. As of the end of 2019, South Korea’s fuel cell power generation capacity was 408 mw (397 mw for power generation and 11 mw for homes and buildings), a 40% share of the global supply [2].Moreover, its experience in hydrogen fuel cell power generation and operation is globally recognized, and it supplies the world’s largest indoor fuel cells (44 mw) to a data centre in Connecticut, United States [3].

This study compares the policies of South Korea and Russia on a hydrogen-based economy. Such policies are required to move away from the hydrocarbon (fossil fuel) energy economy, which is adversely affecting the climate and environment, and change to a sustainable energy policy. In addition, this study discusses the future direction of Russia’s legislation of hydrogen production as well as the plans for and implications of cooperation between the two countries in the hydrogen industry.

2. South Korea’s Hydrogen Policy

South Korea announced the Hydrogen Economy Activation Roadmap in January 2019 and enacted the Act on Hydrogen Economy Development and Hydrogen Safety Management for the first time globally, which came into force on 5 February 2021 after a grace term of one year. In the following sections, we briefly examine the Hydrogen Economy Activation Roadmap and Hydrogen Act of South Korea.

2.1. Content of the Hydrogen Economy Activation Roadmap

A comprehensive plan for the activation of the hydrogen economy was first confirmed in South Korea in the ‘Master Plan for an Environmentally Friendly Hydrogen Economy—Visions for the development of a fuel cell industry and mid- to long-term new and renewable energy development’ [4], which was announced by the Ministry of Commerce, Industry and Energy in September 2005. The Master Plan 2005 set targets of 3% for the share of hydrogen in final energy, supply of two million hydrogen vehicles (8% of all vehicles), and 6.8% for the share of fuel cells for power generation in total power demand. However, this project failed to achieve these goals due to internal factors, such as the delay in commercializing technology resulting from immature hydrogen-related technology and the lack of infrastructure, as well as external factors, such as low interest in hydrogen from the international community [5]. Since then, as the conditions for promoting the hydrogen economy both inside and outside the country have matured, the South Korean government selected this economy as one of the three major strategic investment areas in the Strategic Investment Direction for Innovative Growth in August 2018. In September 2018, the Hydrogen Economy Committee was created, and it prepared roadmaps by gathering opinions and conducting research. In January 2019, the Committee announced the Hydrogen Economy Activation Roadmap after consultation with related ministries.

In this roadmap, the South Korean government established three main policy directions to realize the hydrogen economy. The first is to build an industrial ecosystem that can lead the hydrogen economy, with hydrogen vehicles and fuel cells, where South Korea has a competitive edge, as the two major axes. As shown in

Table 1. Major roadmaps for implementing the hydrogen economy.

Classification		2018	2022	2040
Hydrogen vehicles (number of vehicles)		18,000	81,000	6,200,000
Hydrogen charging stations (number of stations)		14	310	1200
Fuel cells	For power generation	307 MW	1.5 GW	15 GW
	For homes and buildings	7 MW	50 MW	2.1 GW
Hydrogen supply (annual, t)		130,000	470,000	5,260,000
Hydrogen price (KRW per kg)		8000	6000	3000

Source: Ministry of Trade, Industry and Energy.

, the South Korean government aims to become the global leader in hydrogen vehicles by expanding cumulative production from 2000 in 2018 to 6.2 million by 2040 (domestic 2.9 million, export 3.3 million). In addition, it plans to increase the number of hydrogen charging stations from 14 in 2018 to 1200 by 2040, thus expanding hydrogen-fuelled public transport. Furthermore, the South Korean government plans to increase the production of fuel cells for power generation, which are emerging as an environmentally friendly distributed power source, to at least 15GW (export 7GW) by 2040 in connection with hydrogen production using renewable energy. The plans for hydrogen utilization include a plan to develop hydrogen ships, hydrogen trains, and hydrogen construction machines in addition to hydrogen vehicles as promising products of the future.

The second policy direction is to build an economical and stable hydrogen production and supply system. Hydrogen supply will expand from 130,000 tons in 2018 to 5,260,000 tons by 2040 (see

Table 2. Goals for hydrogen production composition, and supply.

Classification	Present	2022	2030		2040
Composition	1. By-product hydrogen 2. Extract hydrogen	1. By-product hydrogen 2. Extract hydrogen 3. Water electrolysis	1. By-product hydrogen 2. Water electrolysis 3. Overseas production	50%	1. By-product hydrogen 2. Water electrolysis 3. Overseas production	70%
			4. Extract hydrogen	50%	4. Extract hydrogen	30%
Annual hydrogen supply goals	130,000 tons	470,000 tons	1,940,000 tons		5,260,000 tons

Source: Ministry of Trade, Industry and Energy.

) by diversifying to water electrolysis, overseas production, and imports and, particularly, by increasing the proportion of green hydrogen. Moreover, the South Korean government plans to reduce the hydrogen price to KRW 3000/kg or lower by 2040 by constructing an efficient and economical hydrogen distribution system. The third policy direction is to prepare a foundation for the transition to a reliable hydrogen economy that can be trusted by people. Safety management standards will be prepared throughout the cycle of hydrogen production, storage, transportation, and utilization; the safety assessment of products and parts will be reinforced; and safety management laws will be enacted [6].

2.2. Content and Significance of the Act on the Development of the Hydrogen Economy and Hydrogen Safety Management

The Act on Hydrogen Economy Development and Hydrogen Safety Management, or the Hydrogen Act for short, was enacted in February 2020 to realize the Hydrogen Economy Activation Roadmap announced in 2019 and support the promotion of the hydrogen economy activation policy [7]. Major developed countries, including the United States, Japan, and EU nations, are pursuing various policies to foster the hydrogen economy; however, South Korea is the only country that has enacted a Hydrogen Act to effectively and steadily promote the transition to the hydrogen economy.

The Hydrogen Act is composed of two pillars: a nurturing policy to realize the hydrogen economy and a regulatory policy for hydrogen safety management. Specifically, it is composed of seven parts: (1) instilling a promotion system to accelerate the transition to the hydrogen economy, (2) fostering and supporting hydrogen-specialized businesses, (3) installing hydrogen fuel supply facilities, such as hydrogen charging stations and fuel cell supply facilities, (4) laying the foundation for the transition to the hydrogen economy, (5) establishing dedicated agencies, (6) managing safety (providing business licenses and recruiting safety managers, as well as inspecting manufacturing facilities, products, and user facilities), and (7) detailing supplementary provisions [8].

The Hydrogen Act is highly meaningful in that a legal basis has been established for the safety of facilities using low-pressure gas and hydrogen fuel, such as those utilizing water electrolysis equipment. The safety of high-pressure hydrogen (1 MPa or higher) facilities, such as hydrogen charging stations and in industrial hydrogen equipment, was previously managed in accordance with the High-Pressure Gas Safety Control Act. However, safety management for low-pressure gas has focused on preventing accidents in workplaces in accordance with the Occupational Safety and Health Act. The establishment of safety standards for low-pressure hydrogen has become necessary as new technologies are being applied and new markets are being formed. In addition, the legal basis for the safety of facilities using hydrogen fuel did not exist. Furthermore, the Hydrogen Act enabled the implementation of a hydrogen economy by requiring the organization and operation of the Hydrogen Economy Committee as a controlling body, and the designation of dedicated agencies to support the promotion of the hydrogen industry, hydrogen distribution, and hydrogen safety.

In July 2020, the Hydrogen Economy Committee was launched with the prime minister as the chair of the committee and with members including the ministers of eight related ministries, such as the Ministry of Trade, Industry and Energy, and leading private sector experts in each field, including industry, academia, and public groups. At the same time, the Hydrogen Convergence Alliance Promotion Group (promotion), Korea Gas Corporation (distribution), and Korea Gas Safety Corporation (safety) were designated as dedicated agencies for the hydrogen economy. In addition, the establishment of a legal basis for the foundation of the hydrogen industry, such as support for the development of hydrogen-specialized businesses and for human resource development and standardization projects, is also meaningful. In particular, companies with a share of hydrogen sales and investments in total sales above the criteria can be designated as hydrogen-specialized businesses that can receive government support and sub-loans for the development and commercialization of hydrogen-related technologies.

Further, the enactment of the Hydrogen Act provides a legal basis for safety management according to current laws, thus enabling the realization of the hydrogen economy and establishment of social acceptance of the safety of hydrogen [9].After promulgating the Hydrogen Act on 4 February 2020, the South Korean government began to enact subordinate laws (enforcement degree and enforcement rule). Among the 62 provisions, 59 items, including the qualifications of hydrogen-specialized businesses, were implemented by presidential decrees, while 43 items, including the inspection criteria for hydrogen supplies, were implemented by the Ministry of Trade, Industry and Energy. To examine the main contents of the subordinate laws of the Hydrogen Act, the governance of the hydrogen economy was first established and the roles of the Hydrogen Economy Committee, working groups, and dedicated agencies (promotion, distribution, and safety) were confirmed. Furthermore, the selection criteria and procedure for hydrogen-specialized businesses and support details (e.g., demonstration and financial support), for which the related industry has shown great interest, were also confirmed. Among the selection criteria for hydrogen-specialized businesses, sales were classified into five classes and the lower limit was set to KRW 2 billion. The proportions of hydrogen sales and investment in hydrogen R&D were also classified into five classes. The basic details for building businesses were further described, including human resource development, standardization, technology development, promotion of international cooperation, and addition of statistics, which are regulated by the ordinances of the Ministry of Trade, Industry and Energy.

The safety management provisions of the Hydrogen Act will be enforced from 5 February 2022, because it takes time to prepare detailed safety standards (e.g., material standards, structures and dimensions, performance standards, thermal treatment standards, inspection items, and test methods).The South Korean government plans to gradually implement the mandatory use of green hydrogen after introducing a green hydrogen certification system in the mid to long term.

3. Russia’s Hydrogen Economy Policy

3.1. Russia’s Energy Policy Directions

On 9 June 2020, the Russian government approved the Energy Strategy 2035. The goals of this strategy are as follows: (1) increase energy production by 5–9% by 2024 compared with 2018, (2) increase exports of fuels and energy resources by 9–15%, (3) increase energy sector investment by 1.35–1.4 times, and (4) increase the gasification level of Russia from 68.6% to 74.7% by 2024 and 82.9% by 2035 [1]. On 5 April 2021, an order of the Russian government for hydrogen policy from 2024 to 2050 was issued. This complemented Russia’s Energy Strategy 2035 in terms of the development of the hydrogen economy and established long-term plans until 2050.

For Russia to maintain its current strong position in the global energy market, its energy development policy must continue to be maintained around crude oil and gas. Therefore, green energy or renewable energy promotion policies are complementary to the development of such traditional energy sources. It is difficult to consider green energy-related policy as Russia’s mainstream policy. The mid-term energy strategies in the Energy Strategy 2035 still focus on the development of traditional resources, and Russia’s development strategies for green energy, such as solar and wind power, remain insignificant. Currently, the proportion of renewable energy in total energy production remains around 3%. Although Russia is planning to increase this to 4.9% by 2030, that is below the production potential of 11.3% [10].

However, in the Energy Strategy 2035, the plans related to hydrogen are notable. Russia has formulated a strategy to develop into a global leader in hydrogen production and export by promoting the production and consumption of hydrogen. In addition to the conversion of hydrogen into an export resource, Russia is interested in the production of methane/hydrogen mixtures to improve the efficiency of natural gas consumption. The Energy Strategy 2035 presents hybrid and electric vehicles, including hydrogen-powered vehicles, as major targets for the development of energy-related innovative technology and presents hydrogen energy technology as a special technology related to low-carbon development. It also emphasizes that Russia has great potential for hydrogen production, while forecasting that hydrogen will become a new energy carrier that will replace the hydrocarbon (fossil fuel) energy carrier to form a hydrogen economy. Figure 1 shows the status and prospects of global hydrogen production.

Russia is taking an interest in the hydrogen industry because the country believes that all gas suppliers, including itself, must remove carbon given the growing interest in the decarbonisation of fuels in the European market. A Russian expert pointed out that hydrogen is likely to become a complementary fuel for natural gas, rather than a competitor, because adding hydrogen to gas further reduces carbon. This expert also mentioned that replacing some natural gas with synthetic fuels based on hydrogen is inevitable because it is difficult to achieve the goal of reducing greenhouse gas emissions otherwise. Therefore, the report predicts that hydrogen technology will receive priority support in Russia and that the cost of hydrogen production will fall markedly over time.

In addition, the report suggests the following solutions to foster Russia as a global leader in hydrogen production and export:

• Government support for the construction of the infrastructure required for the transportation and consumption of hydrogen and energy mixtures;
• Legislative support for hydrogen production;
• Expansion of hydrogen production from natural gas, including the use of renewable energy sources and nuclear power energy;
• Development of Russian low-carbon technologies for hydrogen production using transformation, methane pyrolysis, electrolysis, and other technical methods, including the possibility of the localization of foreign technologies;
• Use of hydrogen and energy mixtures as an energy storage system and converter to increase the efficiency of the centralized energy supply system while stimulating demand for hydrogen and natural gas fuel cells in transportation in Russia;
• Construction of a regulatory system in the hydrogen energy safety field; and
• Reinforcement of international cooperation in hydrogen energy development and access to overseas markets.

A crucial performance indicator for the hydrogen energy task in the Energy Strategy 2035 is exporting hydrogen. Although detailed plans have not yet been published, Russia has set the goal of exporting 200,000 tons by 2024 and two million tons by 2035. Other major goals related to the science, technology, and innovation activities in the energy sector include the development of low-cost high-efficiency drives (including those based on pneumatic or hydrogen systems) and the development of high-efficiency water electrolysis devices (electrolysers) and systems for the small-scale storage and transportation of hydrogen.

3.2. Russia’s Hydrogen Development Roadmap and Production Plan, 2021–2050

In line with the global trend of reducing reliance on hydrocarbon (fossil fuel) energy, which has a negative impact on the climate and environment, Russia plans to produce and export hydrogen. The renunciation of hydrocarbon (fossil fuel) energy is threatening the energy security of Russia, one of the world’s largest suppliers of petroleum, gas, and coal. The government wants to secure Russia as a hydrogen supplier—as an alternative to traditional energy sources—from 2022 onwards.

At the end of July 2020, the Ministry of Energy developed a roadmap for Russia’s hydrogen energy development for 2020–2024 and sent it to the federal government. This plan includes support for pilot projects in the production sector as well as improvements in the regulatory framework and technology regulations regarding the production, transport, storage, and use of hydrogen. In April 2021, the Russian government established a long-term hydrogen energy development roadmap until 2050, thereby improving the roadmap for Russia’s hydrogen energy development published in July 2020 [11].

The detailed plans for Russia’s hydrogen energy development are as follows. The roadmap predicts that by early 2022, incentives will be provided to hydrogen exporters and buyers, and the first producers of hydrogen will be Gazprom and Rosatom. These two companies will construct pilot hydrogen factories in 2024 in nuclear power plants, gas production facilities, and raw material processing plants. Gazprom plans to develop and test a gas turbine operated by methane/hydrogen fuel in 2021 and research the use of hydrogen and methane/hydrogen fuel as motor fuel in gas facilities (e.g., for gas turbine engines and gas boilers) and various types of transportations by 2024.

Rosatom plans to construct a railroad transport testbed using hydrogen in 2024. The Russian Railways, Rosatom, and Transmashholding already announced train movement by hydrogen fuel cells in 2019. Furthermore, Gazprom expects the Nord Stream and Nord Stream2 gas pipelines, which supply gas from Russia to Germany, to be utilized as a hydrogen transport network in the future. Rosatom also plans to produce hydrogen without emitting CO₂ by water electrolysis. For this, it will use nuclear power, which is not used in other countries. In the roadmap, only Gazprom and Rosatom are mentioned as hydrogen production companies; however, Novatekis also interested in the hydrogen business. Novatek is researching the production of so-called blue hydrogen, CO₂ emissions, and subsequent disposal. However, one problem is that greenhouse gas treatment is unregulated in Russia. Novatek believes that the project’s execution speed depends on market demand.

The Russian government has established hydrogen energy development plans in three steps. The first step (2021–2024) includes the promotion of cluster and pilot projects for export and details of the national support policy required to produce up to 200,000 tons of hydrogen by 2024. The second step (2025–2035) includes achieving the export volume goal and starting the first commercial hydrogen production project. Russia has set the goal of exporting up to two million tons of hydrogen by 2035 (optimal goal is 12 million tons) and plans to construct a large hydrogen production facility for export while carrying out a pilot project for hydrogen use in the domestic market based on domestic technologies. The third step (2036–2050) includes large-scale development. The country has set the goal of achieving 15 million tons of hydrogen supply to the global market by 2050 and plans to achieve a selling price of US$2 per kg by drastically lowering the hydrogen production cost. What is notable in step three is the plan to convert to hydrogen production based on renewable energy. The goal of step three is to become one of the largest exporters of hydrogen and energy mixtures based on hydrogen as well as the products of the hydrogen energy industry to the Asia-Pacific region, EU member countries, and suppliers.

3.3. Problems with the Energy Strategy 2035 and Future Tasks

The draft of Russia’s Energy Strategy 2035 published by the Ministry of Energy on 18 December 2019 first mentioned the possibility of the industrialization of hydrogen. This draft forecasted that it is highly likely that hydrogen will become a new global energy source and will create an economy that can compete with traditional energy resources. Because three-quarters of hydrogen is produced from natural gas, Russia could become one of the major exporters of hydrogen by 2035. Since then, the Russian government has enacted the laws necessary for the development of the hydrogen industry mainly through presidential decrees. In April 2021, Russia reconstructed existing hydrogen policies based on an order of the Russian government. Compared with the 2019 draft, the hydrogen economy development roadmap in 2021 also mentions the need to change the frame of Russian energy resources rather than simply complementing the existing fossil fuel economy of the hydrogen industry. This implies that the Russian government recognizes, to some extent, the need to convert the fossil fuel-based economic system into a renewable energy-based carbon-neutral society at the policy level in parallel with conversion to the hydrogen economy, instead of the simple conversion of energy sources.

Table 3. Main contents of Russia’s Energy Development Strategy 2035.

Areas	Main Contents
Legislation	Legislation of the security sector of hydrogen energy and production support.
Export	200,000 tons by 2024, and 2 million tons by 2035.
Infrastructure	Construction of the hydrogen transport and consumption infrastructure and government support plans.
Demand and production	Hydrogen production from natural gas.Hydrogen production using renewable energy and nuclear power energy.Promotion of demand based on hydrogen fuel.
Research and development	Development of low-carbon hydrogen production technology.
International cooperation	Cooperation for hydrogen energy development, and advancement to overseas markets.

Source: KOTRA, Global market Report 21-011.

shows the main contents of Russia’s Energy Development Strategy 2035.

However, Russia’s transition to a hydrogen economy still has many challenges. The most fundamental problem is that Russia is an oil and gas rich country, and the Russian economy is overly dependent on the energy sector. Therefore, Russia should make efforts to diversify its industry by breaking away from its energy-dependent economic structure. Otherwise, the Dutch disease will be unavoidable as in Azerbaijan or Kazakhstan, which have many resources among the former Soviet countries [12]. Dutch disease phenomenon befalls when the national economy produces and exports a single commodity, or when a particular sector becomes the booming sector. Increased exports of particular goods and spending of the accumulated mineral revenue appreciate the national currency, decreasing the competitiveness and thus the production or export volume of the non-booming sectors. Russia is an oil and gas-rich country, which naturally actualizes the existence of Dutch disease syndrome. In Russia’s transition to a hydrogen economy, it is necessary to recognize the Dutch syndrome and prepare a new paradigm for the transition to a hydrogen economy based on renewable energy rather than a hydrogen economy based on oil and natural gas.

Furthermore, Russia is producing hydrogen that is mainly used in industry. Grey hydrogen is mainly produced by modifying natural gas and is not a true green energy because it emits CO₂ during production. Despite its potential to become a major country that produces hydrogen from natural gas, Russia is still expected to face the pressure of ‘green’ regulations. This is because it is not formulating strategies to develop renewable energy sources at the national or firm level. Renewable energy sources and hydrogen can actually compete with gases from Russia, but the Russian government sees this as a problem 20 to 30 years later, not 10 years from now [13]. However, at present, the European Union, South Korea, and other countries are adopting a green energy policy, and the life of grey hydrogen may be short. Therefore, Russia should set a goal to produce clean hydrogen and establish a new hydrogen economy roadmap based on renewable energy.

EU countries are preparing to gradually transition to the ‘cleanest’ hydrogen after importing ‘dirty’ hydrogen. In other words, they will obtain hydrogen by electrolysing water using so-called green fuel (e.g., solar and wind energy). The higher the production cost, the cleaner the ‘green’ hydrogen is. According to the 2035 roadmap, the implementation of the hydrogen plan will not require additional expenditure from the federal budget [14]. However, realizing the hydrogen economy requires enormous support for investors, technology companies, and other participating organizations (e.g., providing incentives and building infrastructure), in addition to spending on R&D and grants. Rosatom has already received national funding for hydrogen. In 2020, President Putin approved a nuclear power science, engineering, and technology (Атoмнаянаука, техника и технoлoгии) programme that includes the development of hydrogen technologies. The budget for this programme is 88.5 billion roubles [15]. The Russian government should actively attract foreign investment to help fund the introduction of a hydrogen economy and transform Russia into a truly green energy society by partnering with countries that have technological superiority, such as South Korea.

Furthermore, the country should prepare as quickly as possible for the development of hydrogen energy storage systems and carry out pilot projects to supply hydrogen fuel to Japan and other markets. If Russia is preparing joint pilot projects, it should demonstrate the possibility of supplying reliable hydrogen fuel to foreign partners and clearly state their technological, economic, and business models for exporting hydrogen. At the same time, pilot projects must be implemented with the best available technologies, and technologies ready for industrial application must be selected first. Simultaneously with research on the implementation of demonstration and pilot projects, Russia must start a national R&D programme focusing on overcoming the most important technical barriers in the hydrogen energy sector. It can only compete with leading countries in hydrogen production and export, such as Australia, when proprietary technologies have been developed and industrial production projects implemented. As a two-step strategy for this, Russia must first aim to overcome the technical barriers to rapid pilot projects and development. Then, Russian companies must be allowed to develop hydrogen fuel markets, while the Russian government creates new markets and energy storage systems in the hydrogen cycle.

4. Implications of Korea–Russia Cooperation in the Hydrogen Industry

Russia has abundant traditional energy sources, such as crude oil and natural gas, and a strategy to take the initiative in the energy market through the short- to mid-term development of such energy sources. Therefore, itis not yet active in the development of green energy resources, such as wind power, solar power, and bio-energy, and is lagging behind other leading countries in global renewable energy, such as China and the United States, in terms of its capacity and production of renewable energy resources. Although Russia has great potential for the development of renewable energy, owing to its large territory, it has a weak incentive to do so because the development and use of traditional energy sources remain high. The share of renewable energy in total energy production is only around 3%.

In Russia, the political and economic interest of companies, such as Gazprom, Rosneft, Lukoil, Transneft, and Tatneft, in the extraction, refining, and transportation of crude oil and natural gas is deeply intertwined. As a result, it is difficult to make large investments in renewable energy and change the energy structure quickly, as in the west. However, since President Putin and Andrei Teksler, Vice Minister of Energy, have said several times that global conversion to renewable energy is the right direction, Russia’s transition to renewable energy is expected to proceed slowly, but steadily [16].

South Korea announced its Hydrogen Economy Activation Roadmap with the goal of developing into the world leader in the hydrogen economy by 2040 and is actively working to convert to a hydrogen economy. Therefore, South Korea and Russia may be able to cooperate in developing a hydrogen economy by playing complementary roles.

Table 4. Strengths and weaknesses of Korea and Russia’s hydrogen economies.

	Strengths	Weaknesses
South Korea	1. World-class technology in hydrogen mobility and hydrogen fuel cells. 2. World-class LNG transportation capacity.	1. Insufficient infrastructure for new and renewable energies. 2. Limited supply of blue and green hydrogens.
Russia	1. Blue hydrogen production with huge natural gas reserves. 2. Infrastructure for natural gas export. 3. Potential for development of new and renewable energies. 4. Hydrogen storage and transportation technologies.	1. Low incentive to the formation of hydrogen ecosystem. 2. Limited foreign investments due to Russia risk. 3. Economic sanctions of the West.

Source: KOTRA, Global market Report 21-011.

shows the strengths and weaknesses of Korea and Russia’s hydrogen economies.

As an example of the planned cooperation between South Korea and Russia, the CIS(Commonwealth of Independent States) marketing director of Hyundai Motor said in the National Industry Forum that Hyundai plans to supply hydrogen vehicles to the Russian market and will construct a transportation infrastructure for this in consultation with Rosatom (Рoсатoм) [17]. Although Hyundai Motor is ready to supply hydrogen vehicles to Russia, it is concerned about low demand due to the lack of infrastructure [18,19]. Hyundai will solve this problem together with Rosatom. Rosatom acknowledges that Russia has no infrastructure to use hydrogen vehicles. As shown in this example, hydrogen-related cooperation projects may be difficult for the time being because Russia lacks the industrial conditions to use hydrogen. However, Russia, as well as South Korea, has already begun to prepare for a hydrogen society. It has also prepared mid- to long-term programmes for hydrogen production and export using nuclear power as well as natural gas, in addition to the development of hydrogen aircraft, hydrogen cars, and hydrogen trains. Now is the time to start a cooperation project between South Korea and Russia. Japan has already prepared a plan and signed a contract to import hydrogen from Russia. South Korea has more advanced hydrogen-related technologies; however, hydrogen may be insufficient when there is high demand. Similar to Japan, South Korea should prepare a long-term hydrogen supply plan. By contrast, Russia has the conditions for the mass production of hydrogen but seems to be somewhat behind in hydrogen utilization technologies. Therefore, South Korea should prepare cooperative strategies in consideration of the current situation in both countries and Russia’s plans to export hydrogen and develop hydrogen aircraft.

Russia still has many problems concerning the introduction of hydrogen energy. National support for using hydrogen vehicles and systematic measures for occupational safety regulations are required. For example, Russia should consider incentivizing commercial vehicle and car sharing for hydrogen energy development and introducing national co-financing for the construction of gas stations.

Russia has formulated a strategy to export hydrogen to Germany, Japan, and other regions through hydrogen production within the country. It is also promoting rapid pilot projects, developing hydrogen energy storage systems, overcoming the technological barriers related to hydrogen energy, and conducting R&D in the field of hydrogen energy. In consideration of this, South Korea could also find ways to cooperate with Russia in these fields. To activate the hydrogen economy that the South Korean government is promoting, a long-term strategy to secure large volumes of hydrogen must be prepared. Therefore, South Korea should consider not only signing a hydrogen industry cooperation agreement with Russia, which is highly likely to become a major hydrogen supplier, but also developing and selling hydrogen carriers to Russia and constructing a South Korea–North Korea–Russia hydrogen pipeline in the long term. Such issues as hydrogen production using cheap electricity produced in eastern Russia and the construction of a hydrogen pipeline passing through North Korea should be considered in advance as a trilateral cooperation project between South Korea, North Korea, and Russia.

5. Concluding Remarks

This paper compared the policies of Korea and Russia on the transition to a hydrogen economy and addressed the related problems. In addition, it was proposed that South Korea and Russia should move away from the hydrocarbon (fossil fuel) energy economy, which adversely affects the climate and the environment, and switch to a sustainable energy policy.

Russia is an oil and gas rich country, which naturally actualizes the existence of Dutch disease syndrome, while South Korea has no natural resources but has various know-hows in energy utilization. Cooperation in the hydrogen industry between South Korea and Russia will be a good example of what kind of synergistic effect can be obtained when a country that mainly focuses on hydrogen and energy production and a country that utilizes it cooperate.

To present a direction for hydrogen industry cooperation between South Korea and Russia, the most important task is for South Korea and Russia to understand the purpose of the international community’s transition to a hydrogen economy and set up a cooperative system in line with the objective of carbon neutrality. In other words, the transition to a hydrogen economy must create a carbon-neutral society to respond to the climate crisis. Therefore, South Korea and Russia should cooperate to construct a hydrogen economy based on green and renewable energy as a top priority, even if this collaboration is slow. With regard to this, South Korea should explain to Russia the meaning of the enactment of the Hydrogen Act in South Korea to move to a hydrogen society based on green energy. We suggest that as a mid- to long-term goal, South Korea and Russia could construct a common system to store and distribute hydrogen produced with renewable energy in Asia, or another suitable region.

However, this paper highlights and examines the policy aspects of hydrogen economy transition in Korea and Russia; therefore, the theoretical analysis of the hydrogen economy transition in Russia is somewhat incomplete. This is an issue that needs to be improved in the future.