Korea’s Competitiveness Facing Red Light
As the global aviation industry accelerates its efforts to introduce Sustainable Aviation Fuels (SAF) for carbon emission reduction, it appears that no South Korean airport has made it onto the list of “SAF-supplying Airports” designated by the International Civil Aviation Organization (ICAO). Concerns are being raised that South Korea could lose its competitive edge in the crucial SAF sector of the future aviation market, potentially ceding aviation leadership to neighboring countries like Japan and China.
According to data released on the ICAO website on Oct. 16, there are a total of 109 “Airports Distributing SAF” worldwide. Among them, 69 airports have a system for continuous SAF supply, while 40 have a system for on-demand supply. More than two-thirds of these airports are located in the United States and Europe. In East Asia, Japan has two airports, Haneda and Narita, and China has two, Ningbo and Tianjin, included in the list. These airports have been conducting commercial flights using SAF since last year. At Japan’s Narita Airport, for instance, Etihad Airways from the United Arab Emirates took off after refueling with SAF at the end of last year. In contrast, no South Korean airport has made it onto the list.
The European Union (EU) mandates the blending of SAF fuel for all aircraft operating within its region. Starting in 2025, 2 percent of all total aviation fuel must be SAF. France has already enforced 1 percent mandatory SAF usage. In the United States, there is a tax credit of US$1.25 to US$1.75 per gallon of SAF, aiming to promote the production and supply of SAF, which is three to six times more expensive to produce than conventional aviation fuel. Japan has set a target to introduce a mandatory 10 percent SAF usage by 2030 and aims to have an annual production capacity of 1.9 billion gallons.
While global nations are actively investing in the SAF sector, South Korea has not even taken a significant step in that direction. None of the airports in the country, including Incheon International Airport, have the infrastructure for SAF storage, supply, distribution, and refueling. What’s more, there are no plans for future implementation. An official from Incheon International Airport stated, “Currently, there are no plans in place for the construction of SAF infrastructure.”
There are also legal issues at play. Under the current Petroleum and Alternative Fuel Business Act, SAF is not included as an alternative fuel. Since producing petroleum products from sources other than oil is illegal, this restricts the construction of SAF production facilities within the country. This legal hurdle is why even major oil companies that are actively involved in SAF research have been unable to create production facilities.
As a result, in order to even use SAF in South Korea, complete reliance on imports is necessary. For instance, Korean Air recently imported SAF entirely for its cargo flights on the Incheon to Los Angeles route, with approximately 2 percent SAF content. Even on routes where a 1 percent SAF usage is mandatory, such as the one between South Korea and Paris, Korean Air can only use SAF when flying from Paris to Incheon because it cannot refuel with SAF in South Korea.
The global SAF market has emerged as a battleground for future environmentally friendly energy. Forecasts suggest that the SAF market will reach a value of US$21.57 billion (approximately 29.23 trillion won) by 2027. While most aircraft are expected to be mandated to use SAF, the inability to refuel with SAF at airports can lead to resistance from airlines. It can also result in airlines being overlooked in new route decisions and other aspects of the aviation industry.