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Photo = Yonhap news |
[Alpha Biz= Paul Lee] The South Korean government has approved a major national research and development (R&D) project to accelerate the commercialization of hydrogen-based ironmaking technology—a long-standing goal of the country's steel industry.
On June 26, the Ministry of Trade, Industry and Energy (MOTIE) announced that the Korean Hydrogen Reduction Steelmaking Demonstration Project has passed a preliminary feasibility study conducted by the National R&D Program Evaluation Committee. The government will allocate KRW 308.8 billion (approx. USD 222 million) in public funds through 2030. With additional investments from steelmakers including POSCO and Hyundai Steel, the total project budget will reach KRW 814.6 billion (approx. USD 586 million).
The hydrogen-based steelmaking process, or hydrogen direct reduction (HDR), is a breakthrough eco-friendly technology that replaces coal-derived coke with hydrogen as the reducing agent. Unlike conventional blast furnaces that emit large volumes of CO₂, the HDR method emits only water vapor—cutting carbon emissions by over 95%.
While Korea’s steelmakers acknowledge the necessity of adopting HDR to meet global decarbonization targets, the financial burden remains a major barrier. According to the Korea Iron & Steel Association, POSCO would need to invest approximately KRW 54 trillion (USD 39 billion) to fully transition its blast furnaces to hydrogen-based systems—KRW 27 trillion to decommission existing furnaces and another KRW 27 trillion to build new hydrogen-based facilities. Including Hyundai Steel, total industrywide costs could exceed KRW 68.5 trillion (USD 49 billion).
With global steel markets under pressure from Chinese overcapacity and sluggish demand, the industry has called for government support to cover at least the R&D and demonstration phases of the transition. In comparison, the European Union is investing approximately KRW 23 trillion (USD 16 billion), the U.S. KRW 8.5 trillion (USD 6 billion), and Japan around KRW 7 trillion (USD 5 billion) in low-carbon steelmaking initiatives.
The new public-private partnership is expected to position Korea as a leader in next-generation green steel technology, with commercial deployment of hydrogen steelmaking targeted for 2030.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
