Economic effects of the hydrogen fuel cell sector in South Korea: An input-output analysis

Abstract

The South Korean government plans to deploy approximately 200–300 MW of hydrogen fuel cells (FCs) annually from 2023 to 2036, all of which will be connected to the national power system, not used for self-consumption. The government is requesting quantitative information on the economic effects of the FC sector. In response to this request, this study delves into the four economic effects of expanding FC use in South Korea adopting the input-output (IO) approach for the first time in the literature. More specifically, it investigates how much investment or production in the FC sector affects other sectors. Economic performance, such as production, value-added, jobs, and wages, is the subject of investigation. The FC sector is dealt with separately as the FC-manufacturing (FC-M) sector and the FC-equipping and operating (FC-E&O) sector. The 2019 IO table, 34-sector classification, demand-driven model of the IO approach, and exogenization of the FC sector are used. The results show that each unit of investment or production in the FC-M and FC-E&O sectors triggers 2.328 and 1.793 units of production, 0.785 and 0.967 units of value-added, and 0.346 and 0.575 units of wages, for each sector, respectively, across the economy. KRW 1 billion of production or investment in the two sectors creates approximately 7.7 and 3.8 jobs, respectively. These figures can be useful for exploring the economic effects of FC deployment in the future on the South Korean economy.