A bill to amend the Petroleum and Petroleum Alternative Fuel Business Act passed the National Assembly’s plenary session on Sept. 9, paving the way for refiners to produce sustainable aviation fuel (SAF).
SAF is an aviation fuel derived from renewable biomass or carbon dioxide. It has the same composition and combustion characteristics as conventional crude oil-based jet fuel and can be utilized without any modification to aircraft jet engines.
Under the current law, petroleum products such as jet fuel can only be produced from natural crude oil, and it is illegal to make petroleum products from raw materials other than oil, making it difficult to build SAF production facilities in Korea. Previously, refineries were only allowed to sell petroleum refining products, but the amendment expands the scope to include biofuels and renewable synthetic fuels, which are the raw materials for SAF.
The Korean refining industry has been active in the SAF market so it welcomed the bill. The industry had been investing in facilities to meet a market shift to cleaner biofuels in the face of toughening global carbon regulations.
The passage of the amendment is expected to accelerate the pace of Korean refiners’ SAF business. SK innovation aims to commercialize SAF in 2026 and will build related facilities in the Ulsan Complex (CLX) and expand its business into the storage and shipment of low-carbon raw materials and products such as SAF.
GS Caltex plans to build a biofuel refinery in Kalimantan, Indonesia with POSCO International. Ground will be broken for the facility early next year with a targeted commercial operation in the second quarter of 2025 and will produce 500,000 tons (t) of biofuel and edible oil annually.
HD Hyundai Oilbank is considering converting part of its biodiesel production plant at its Daesan plant in Seosan, South Chungcheong Province, Korea, into a hydrogenated vegetable oil (HVO) facility. The targeted SAF production scale after 2025 is about 500,000 tons per year.
S-Oil is planning to jointly develop its biofuel business with Samsung C&T in 2021 and establish a raw material supply chain and production utilizing overseas infrastructure. In December 2023 the company launched a demonstration project to produce SAF raw materials through a special regulatory sandbox.
Experts point out that Korea has lagged behind advanced countries in SAF-related policies and technologies compared to other deoxygenation technologies such as electrification and hydrogenation due to the negative perception of biofuels. Therefore, some people assert that the passage of the amendment is the first step toward the introduction of SAF and that it is necessary to discuss the introduction of investment tax credits to promote the SAF industry.