Hydrogen hurdle: Sparks fly over Seoul’s gamble on fuel cell cars

A Hyundai Nexo hydrogen car refuels at a hydrogen station in Seoul. Low prices mean station operators are struggling to turn a profit. (Reuters)
Updated 25 September 2019

Hydrogen hurdle: Sparks fly over Seoul’s gamble on fuel cell cars

  • Deadly explosions and profit concerns turn Hyundai and South Korea’s FCV dream into a million-dollar nightmare

SEOUL: Aiming to cash in on a push by South Korea to promote fuel cell vehicles, Sung Won-young opened a hydrogen refueling station in the city of Ulsan last September. Just one year later, he is thinking about closing it down.

Sung’s new hydrogen station is one of five in Ulsan, home to Hyundai Motor Co’s main plants and roughly 1,100 fuel cell cars — the most of any South Korean city.

The government paid the 3 billion won ($2.5 million) cost — six times more than fast-charging equipment for battery electric cars — and the two pumps, located next to Sung’s gasoline stand, see a steady flow of Hyundai Nexo SUVs daily.

Even so, Sung hasn’t been able to turn a profit, hamstrung as the equipment can only refuel a limited number of cars each day and by the government’s decision to set retail hydrogen prices low to bring consumers on board.

“All hydrogen stations will have no choice but to shut down unless the government subsidizes operating costs,” Sung, 32, said. “Otherwise, this place will just become a 3 billion won chunk of steel.”

If those impediments to commercial viability were not enough, a fatal hydrogen storage tank explosion this year has spurred protests against the government and Hyundai’s ambitious campaign to promote the zero-emissions fuel.

Calling hydrogen power the “future bread and butter” of Asia’s No. 4 economy, President Moon Jae-in has declared himself an ambassador for the technology and targeted 850,000 fuel cell vehicles (FCVs) on South Korean roads by 2030.

That is no mean feat given fewer than 3,000 have been sold so far. Japan, also a big proponent of FCVs and with an auto market three times larger, plans 800,000 in the same timeframe.

The challenges of building out refueling infrastructure in South Korea underscore the long and uphill battle FCVs face to widespread adoption at a time when electric cars are stealing much of the green car limelight.

And for the government and Hyundai, the only automaker selling a fuel cell car in the country, it is an expensive project with no guaranteee of success.

Moon is set to spend $1.8 billion in central government funds to subsidise car sales and to build refueling stations for the five years to 2022 at current subsidy levels.

Subsidies cut Nexo’s price by half to about 35 million won and sales of the model, launched in March 2018, have surged this year. In contrast, Japanese subsidies fund one third of Toyota Motor Corp’s Mirai FCV, bringing its price to around $46,200.

Some critics argue Hyundai is the main beneficiary of the government’s ardent backing, but the automaker also has much at stake. With its suppliers, it plans to invest $6.5 billion by 2030 on hydrogen R&D and facilities.

“There are risks that come with the need to make large-scale investments in building (hydrogen car) production facilities, securing supply channels and establishing sales networks,” Hyundai said.

In May, a hydrogen storage tank at a government research project in the rural city of Gangneung exploded. It destroyed a complex about half the size of a soccer field, killing two and injuring six. A preliminary investigation found the blast was caused by a spark after oxygen found its way into the tank.

“One victim was blown away by pressure and then killed after being hit by rock,” said Kong Gikwang, a lawyer who represents the family of one of the two who died in a lawsuit against the research complex.

One month later, there was an explosion at a hydrogen refueling station in Norway. This week, a hydrogen gas leak and subsequent fire at a South Korean chemical plant caused three workers to suffer burns.

Such safety concerns have fueled protests by South Korean resident groups worried about hydrogen facilities being built in their areas.

Kim Jong-ho, who began a month-long hunger strike against a planned fuel cell power plant in the port city of Incheon two days before the Gangneung blast, said the explosion refocused attention from pollution risks of hydrogen production to safety. Incheon has since agreed to review the safety and environmental impact of the plant.

Potential station operators have also backtracked since the explosions.

Pyeongtaek city in April picked two gasoline stand operators to run hydrogen stands but within three months, both decided to bow out, forcing the city to restart its search.

“At first, I had great interest. But once I looked closely, I realized the government was pushing for something that can’t make profits,” one of the prospective operators said. “And I couldn’t live worrying about whether there would be an explosion.”

To counter such fears, the government is holding briefings for residents, while Hyundai said it is working to convince consumers of hydrogen’s safety with information promoted through Youtube and social media.

Despite government plans for 114 hydrogen stations — key for the widespread adoption of FCVs — to be built by the end of 2019, only 29 have been completed. Difficulties in gaining funds from local governments or businesses meant to help shoulder half the costs, delays in finding sites and opposition from residents have also hobbled efforts.

Those constructing the stations know they are in for a slog. “There will be a period of going through the valley of death,” Yoo Jong-soo, CEO of a consortium which has been tasked with building 100 stations, but which does not expect to make money until 2025, said in a June presentation.

The consortium, which includes Hyundai, has also called on the government to subsidise operating costs for hydrogen stands. Such a move is under consideration, an industry ministry official told Reuters, declining to be identified as the plan has not been finalized.

“This will only increase the burden for taxpayers who have to pay for the government’s hydrogen society splurge,” said Ryu Yen-hwa, a former Hyundai Motor engineer and auto analyst who believes FCVs do not make commercial sense.

Just last month, Moon’s administration announced it would more than double spending on the “hydrogen economy” to over 500 billion won next year.

That includes 359 billion won on FCVs and refueling stations, up 52 percent percent from this year and a huge leap from the 29.8 billion won spent in 2018.

Hyundai, which touts the Nexo as an “air purifier on the road,” is banking on Seoul’s aggressive targets to help it achieve economies of scale and bring down costs.

It aims to cut the cost of a hydrogen car before subsidies to 50 million won once annual FCV production reaches 35,000. It hopes to make 40,000 per year by 2022, compared with plans for 11,000 next year.


Greek town bets on slow tourism to overcome virus

Updated 3 min 18 sec ago

Greek town bets on slow tourism to overcome virus

  • The pandemic is an opportunity to promote alternative tourism, fishing tourism

PREVEZA, Greece: Yannis Yovanos scans the waters of the Ambracian Gulf with his binoculars for dolphins shooting into the air before curving back down into the sea.

His early warnings prompt just a dozen tourists on the deck of Yovanos’ small boat to scramble for their smartphones, hoping to secure a snap of the aquatic mammals’ aerial acrobatics.

Officials in his home town of Preveza hope that it’s just this kind of small, family-run business that will help them overcome the coronavirus’ impact on travel — while sparing the region the environmental impact and economic distortions of the mass tourism more common on Crete or the Ionian islands.

“We don’t want to stay all day on a beach, we’re looking for a different experience,” said Dutch tourist Frederika Janssen.

“The pandemic is an opportunity to promote alternative tourism, fishing tourism,” as well as local life and culture “directly related to the natural resources that date from Antiquity,” said Constantin Koutsikopoulos, who heads the agency charged with managing the Ambracian Gulf.

Inside the gulf is a protected wetlands park, some 400 sq. km that is one of Europe’s Natura 2000 wildlife diversity regions.

One hundred and fifty dolphins, loggerhead sea turtles and 300 species of aquatic birds including the rare Dalmatian pelican live in the lagoons and reed beds of the gulf.

Nestled between green hills, the Ambracian Gulf is fed by rivers descending from the mountains of the Epirus region of northwestern Greece.

Yovanos’ hometown guards the little strait that connects the gulf with the Ionian Sea.

Dolphin watching trips like these mean “I am realizing my dream of living the life of a fisherman among our natural riches,” said the 49-year-old from behind a greying beard.

For Greece as a whole, a gamble on reopening its borders to tourists as early as June appears to have paid off for now.

New coronavirus cases have appeared only slowly since then, with fewer than 6,000 cases and just over 200 deaths nationwide from the pandemic.

Although Preveza has opted for a slower, more family-oriented approach to travel compared to better-known Greek destinations, it hasn’t renounced Mediterranean holiday clichés altogether.

With the sector suffering a big hit from the coronavirus epidemic, Preveza city officials launched a promotional campaign, securing the title of safest place for a European beach holiday from website European Best Destinations.

“Monolithi beach, the main beach of Preveza, is ... the longest one in Europe... you won’t have to struggle to get a nice spot, fix your beach umbrella and spend relaxing days in the sun,” it wrote.

And new infrastructure in the shape of a marina has helped draw sailors away from packed ports on the islands.

“Preveza is the right place compared to Corfu which is a very nice island but very crowded,” said Nick Ray, a British businessman, from the deck of his yacht that had put into the town’s port.

With its fishing and fish farming, the Ambracian Gulf is already the region’s economic motor.

Sustainable, environment-focused tourism should give the authorities even more reason to deal with the threats to the gulf such as pollution, poaching and illegal fishing.

There’s even something for ancient history buffs in the ruins of Nicopolis, founded by Caesar Augustus in honor of his naval victory nearby in 31 BC, where some Roman mosaics are still preserved.