South Korea plans to boost research and development of carbon-neutral aviation biofuels, or bio-jet fuel, as the aviation industry works to meet global net-zero targets. Korean jet fuel producers are concerned that regions mandating the use of bio-jet fuels, such as the European Union, could threaten their position as one of the world’s leading jet fuel exporters.
The Ministry of Trade recently agreed to incorporate the “bio-aerosol response project” into its new pre-feasibility study applications on Mar. 19. This project aims to provide R&D support to accelerate the commercialization of bio-jet fuels and devise strategies for securing the necessary raw materials for fuel production.
“The International Civil Aviation Organization (ICAO) has mandated that all aircraft taking off from 27 EU countries should include at least 2% bio-jet fuel starting next year,” said a Ministry of Trade official. “The project’s goal is to bolster domestic bio-jet fuel supply by strengthening the competitiveness of the Korean energy sector.”
Bio-jet fuel is a sustainable aviation fuel (SAF) that can reduce carbon emissions by 70% to 80% using recycled raw materials such as cornstarch and cooking oil. But the technology for producing bio-jet fuel in Korea is still in its infancy.
The country’s oil refining and aviation sectors are concerned about their apparent lack of bio-jet fuel production technology. GS Galtex, a Korean energy and chemical company jointly owned by Chevron and GS Group, is the only domestic refiner that has imported a small amount of bio-jet fuel from Neste for pilot test production. But this test is merely a preliminary exploration - Korea has yet to produce efficient bio-jet fuel for commercial purposes.
Airlines that fail to comply with ICAO’s requirements for blending bio-jet fuel with conventional jet fuel will be required to buy carbon emission credits. Given that the EU plans to continue raising the bio-jet fuel blend ratio, the pressure on the Korean aviation sector is also expected to increase. EU’s blending mandates for jet fuels - mixing conventional jet fuels with sustainable aviation fuels - is set at 2% next year and will rise to 6% in 2030, 20% in 2035, and 70% in 2050.
The amount of carbon credits airlines must purchase for not following the mandate has yet to be decided. “If carbon credits pricing or the mandatory blend ratio is too high, airlines could suffer financially, and many have to suspend operations of certain air routes,” said an industry insider.
Korea’s booming export market for jet fuel, which has contributed significantly to the country’s economy, also faces potential disruption. According to the International Energy Agency (IEA), Korea’s jet fuel exports reached 10.83 million tons in 2022. The country ranked first in jet fuel exports, ahead of the U.S. and the Netherlands, which exported 8.48 million tons and 7.72 million tons, respectively. Korea’s jet fuel exports were six-fold that of Japan, the fourth-largest exporter at 1.68 million tons.
In response to these challenges, the government is introducing supportive measures such as tax incentives so domestic refiners can better engage in bio-jet fuel R&D.
“For now, the bio-jet fuel blending mandate applies only within the EU; there’s not much pressure, but dynamics could shift if the required blending percentages rise and other countries decide to adopt similar measures,” said an official from the Korea Petroleum Association.
