The Impact of the Introduction of Hydrogen Energy into the Power Sector on the Economy and Energy Sectors

Hydrogen scenarios are set by mixing three alternatives of demand side and three alternatives of supply side corresponding to demand side. The demand side alternatives are classified as a baseline demand, high demand, low demand according to hydrogen demand. Under the baseline demand scenario, hydrogen energy will be reach 5% market share in 2031. Hydrogen demand is expected to reach 12.19 million ton in 2050. Under high demand scenario, the timing of 5% market share will be moved up but the hydrogen energy demand in 2050 may be similar to that under the baseline scenario as the demand is expected to be saturated around 2050. Under low demand scenario, hydrogen energy will be firstly introduced in 2018 and reach 5% market share between 2031 and 2034. The hydrogen demand is expected to reach 11.60 million ton in 2050. Target groups for this analysis are 2 regions, 6 sectors and 3 production factors. Fossil fuels are classified as coal, oil, electricity, LNG and hydrogen as using of the fossil fuel energy is the main reason of the environmental pollution and pollution degree depends on each energy source. This research adopts a dynamic computable general equilibrium model using a top-down approach to estimate economic effect of the introduction of hydrogen into the Korean energy system. Firstly, demand for electricity is expected to increase due to the introduction of hydrogen energy into the power sector. In case of baseline scenario, the analysis shows that demand for electricity increases to 0.025% against BAU level till 2049 and to 0.024% against BAU level in 2050. Given the introduction of hydrogen energy in the power sector, demand for fossil fuel decreases, especially for the coal. Even though hydrogen energy is economically infeasible, subsidies from the government is expected to lead to a reduction of production costs and energy transition from the fossil fuel to hydrogen energy. It is analyzed that coal demand starts to decrease due to the mandatory introduction of hydrogen in 2016 and decrease to 30.29% against BAU level by 2050 under the baseline scenario. This study also shows that demand for LNG starts to decrease in 2015 and decrease to 1.10% against BAU level by 2050. Petroleum demand is expected to start to decrease in 2006 and decrease to 3.42% against BAU level by 2050. Mandatory introduction of hydrogen and subsidies from government takes effects on the decrease of the total demand. In case hydrogen energy industry is funded by government, household income will decrease due to the tax increase and total demand will be decrease. However, it is analyzed that demand decline is eventually easing off with GDP growth. Reduction of production cost is explained by the financial support from the government and GDP growth is evaluated to come from the increase of the investment in hydrogen production and also increase of hydrogen output. In addition, mandatory introduction of hydrogen energy in the power sector helps reduce CO2 emission through the transition from carbon economy based on fossil energy to hydrogen economy. It is analyzed that CO2 emission starts to decrease after introduction of hydrogen and decrease to 0.316% against BAU level by 2050 under the baseline scenario. See above. See above