Changwon, South Korea — Seven years ago, the atmosphere in this industrial city was intoxicating. Hailed as the vanguard of South Korea’s "Hydrogen Economy," Changwon rebranded itself as an eco-friendly energy capital, complete with presidential visits and futuristic city buses running on clean fuel.

Today, that grand vision stands at a standstill. At the heart of the crisis is the Changwon Liquid Hydrogen Plant, a 105-billion-won (approximately $75 million USD) facility designed to be the country's first commercial liquid hydrogen production hub. Completed in 2023, the plant has failed to achieve commercial viability. It now faces the ignominy of potential power cutoffs, unable to generate enough revenue to pay its monthly electricity bills, let alone recoup its massive investment.

A Supply Chain Built on Sand

The facility was engineered to liquefy gaseous hydrogen by cooling it down to minus 253 degrees Celsius, shrinking its volume 800-fold to supply hydrogen stations and fuel-cell vehicles efficiently. With a design capacity of 5 tons per day, the plant was supposed to catalyze a boom in hydrogen-powered buses, ships, and drones.

Instead, reality intervened. The national rollout of hydrogen vehicles and refueling infrastructure lagged far behind projections, while the production cost of liquid hydrogen remained uncompetitively high. The result is a classic structural mismatch: a state-of-the-art facility saddled with high operational overhead and a scarcity of buyers willing to pay market-clearing prices.

Legal Limbo and Fiscal Strain

Compounding the operational distress is a looming financial liability. Under a long-term agreement, the Changwon Industry Promotion Agency committed to purchasing 5 tons of liquid hydrogen daily for 30 years—a total obligation estimated at 900 billion won.

While recent court rulings have offered temporary relief—with appellate courts ruling that the municipal government does not bear direct debt liability, and a lower court favoring the agency in a supply-payment dispute—the legal battles are far from over. The Supreme Court has yet to make a final ruling, and the agency lacks the fiscal muscle to sustain a multi-decade financial commitment of this magnitude.

Navigating Political Shifts and Moving Forward

Analysts point out that Changwon's predicament reflects broader structural vulnerabilities in public-led industrial investments. New industries require state support during their infancy, but policymakers often underestimate the timeline and capital required to bridge the gap between policy ambition and market maturation. Furthermore, shifting political priorities across changing local and national administrations have disrupted policy continuity, leaving the plant caught in political crossfire without a clear rescue roadmap.

Recently elected Changwon Mayor Kang Ki-yoon has signaled a willingness to tackle the crisis head-on. Discussions are underway to explore a private sale, with pressure mounting on project participants like Doosan Enerbility to share accountability.

Experts emphasize that finding a buyer or securing alternative offtake agreements will be an uphill battle. Yet, abandoning the project or ignoring the fiscal bleeding is no longer an option. For Changwon, the challenge ahead is to confront the hard economic truths of its ambitious past, transparently communicate the reality to its citizens, and deploy pragmatic governance to salvage what remains of its hydrogen dream.

[ⓒ Global Economic Times. 무단전재-재배포 금지]