Refiners are shifting their business focus from refining margins to biofuels. They are looking to grow their eco-friendly biofuel business, as the use of biofuels may rise in order to reduce carbon in line with a global low-carbon agenda.
According to industry sources on Oct. 17, the European Union (EU) plans to introduce a 2 percent mandatory biofuel share for transportation starting from 2025, raising it to 14 percent in 2030 and 50 percent in 2050. France has already implemented a 1 percent sustainable aviation fuel (SAF) mandate.
The United States has also implemented a mandatory biofuel blending system for transportation fossil fuel suppliers. Korea plans to gradually increase the percentage of biofuel blending in diesel production by 2030.
In response to these policy changes, SK innovation is making various investments with the aim of producing SAF in Ulsan in 2026. Last year, the company made a US$20 million equity investment in Fulcrum BioEnergy, a U.S. company that produces SAF by processing food waste and other domestic wastes. It has also laid the foundation for securing raw materials in Korea and China. In March of this year, its subsidiary SK trading international invested in Jinxiang, a Chinese company that produces used cooking oil (UCO) with animal fats and byproducts of slaughter and food waste from restaurants and food factories, and in October signed a share purchase agreement to invest in Daekyung O&T, a Korean company that produces used cooking oil with food waste.
GS Caltex plans to build a biomass refinery in Kalimantan, Indonesia, with POSCO International. Ground will be broken for the refinery early next year with the goal of beginning its commercial operation in the second quarter of 2025. The refinery will produce 500,000 tons of biofuel and edible oil annually.
The companies will also jointly pursue a project to recover waste materials from the refinery. GS Caltex plans to secure renewable raw materials for the production of biofuels such as bio-jet fuel and bio-ship fuel through the waste material recovery project.
HD Hyundai Oilbank will pursue a three-stage bio business road map leading to the construction of a biodiesel manufacturing plant, production of next-generation bio aviation fuel and entry into the biochemical business.
HD Hyundai Oilbank is constructing a 130,000-ton-per-year biodiesel plant at its Daesan plant in South Chungcheong Province in Korea to make the plant go live in the second half of this year, and will expand its eco-friendly product value chain by producing biofuel and biochemical products in the future.
S-Oil agreed on jointly developing the biofuel business and establishing a raw material supply chain and production utilizing overseas infrastructure with Samsung C&T in 2021. Last year, it also invested 700 million won in Allsu, an online platform for collecting waste oil.