Just hours before bids were due on October 17, South Korea’s Ministry of Climate, Energy and Environment abruptly canceled the Clean Hydrogen Power Generation Bidding (CHPS), sending shockwaves through the energy sector.
The decision, officially made “to align with the 2040 coal phase-out policy,” disrupted months of preparation by power generation companies and reignited concerns about policy volatility under the new administration.
The Korea Power Exchange (KPX), which oversees the CHPS process, announced the cancellation and stated it would issue a “new announcement” after reviewing alignment with government policy. The move, however, underscored growing tensions between the government’s decarbonization objectives and the technical realities of transitioning the country’s power mix toward cleaner fuels.
The cancellation centers on the government’s commitment to close all coal-fired power plants by 2040. Since the CHPS mechanism allowed for coal-ammonia co-firing — blending ammonia with coal to lower emissions — projects approved under the current framework could have extended the operation of coal-based facilities to as late as 2043 or 2044. That timeline conflicts directly with the Lee Jaemyung administration’s 2040 coal phase-out agenda.
An official from the Climate Ministry noted that allowing co-firing projects to proceed could undermine the credibility of the government’s long-term sustainability goals. As a result, the Hydrogen Power Generation Bidding Market Committee opted to cancel the bidding altogether rather than risk approving projects that might later become non-compliant.
Yet, the abrupt timing — on the very day bids were due — exposed weaknesses in coordination between regulatory bodies and industry stakeholders. Energy firms that had spent the past year securing certification and supply guarantees for clean hydrogen or ammonia found themselves at an operational and financial impasse.
Transition Risks and Market Confusion
Clean hydrogen power generation in Korea encompasses electricity produced using fuels verified as “clean hydrogen” or “clean ammonia,” including both coal-ammonia and LNG-hydrogen co-firing. The CHPS system, introduced last year, was intended as a transitional mechanism to gradually scale hydrogen integration into the national power mix.
By canceling the current bidding round, the government effectively halted this progression, at least temporarily. According to KPX officials, the decision was “unavoidable” to prevent greater disruption after contracts were issued. However, within the industry, the sudden reversal has deepened concerns about the stability and predictability of Korea’s hydrogen and clean energy policy framework.
One industry representative noted, “We were notified of the cancellation on the deadline day. After a year of preparation, this uncertainty makes it nearly impossible to plan future investments.” Such statements reflect a broader anxiety across Korea’s energy sector — a sector already navigating tight decarbonization timelines, volatile fuel markets, and shifting regulatory expectations.
The Ministry of Climate, Energy and Environment, together with KPX, has announced plans to form a working group and reissue a revised bidding notice within the year. Analysts anticipate that the new guidelines will likely exclude coal-ammonia co-firing or restrict operations to end strictly by 2040. That change would render co-firing projects economically unfeasible, potentially narrowing participation to LNG-hydrogen co-firing plants, which themselves may face tighter emissions and performance requirements.
Environmental organizations have long criticized coal-ammonia co-firing as a transitional solution that maintains fossil dependency while offering only marginal emissions reductions. Removing it from the CHPS scheme could accelerate investment in pure hydrogen generation technologies — but at the cost of disrupting near-term project pipelines.
Growing Pressure for Policy Consistency
The CHPS cancellation exposes a deeper structural issue: Korea’s decarbonization strategy relies on simultaneous coal retirement, hydrogen infrastructure build-out, and clean power market liberalization — all of which demand stable and synchronized policymaking. Frequent shifts in direction risk slowing progress on all fronts.
While officials insist that no bids had been submitted prior to the cancellation, the lack of advanced notice has eroded industry confidence. As Korea aims to position itself as a leader in the hydrogen economy, the government faces increasing pressure to provide clear, consistent frameworks that can sustain investor and industry participation over the long term.
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