South Korean government’s plan to introduce bioethanol at gas stations as part of efforts to reduce oil dependency and combat climate change has been scrapped after about a year. The Ministry of Trade, Industry and Energy, which announced the ‘Environmentally Friendly Biofuel Expansion Plan’ in October 2022, initially stated its intention to pilot the use of bioethanol at public agency vehicles and some gas stations, with a focus on assessing safety, environmental friendliness, and economic viability.
Bioethanol, produced through the fermentation of starchy crops like corn, wheat, sugarcane, and potatoes, can be used as a petrol substitute for road transport vehicles. In Europe, Japan, South America, and the United States, there’s a legal mandate to incorporate a certain percentage of bioethanol into gasoline. However, as of now, Korea lacks legislation specifying mandatory blending of bioethanol fuel.
According to the Ministry and the domestic petroleum industry sources on Feb. 6, the government’s plan to implement a bioethanol pilot project led by the private sector this year is currently in limbo. An official from the Ministry informed ChosunBiz, “The government initially intended to pilot the introduction of bioethanol at some gas stations based on the voluntary participation and cooperation of private petroleum companies, aiming to assess its feasibility. However, the reluctance of the petroleum industry has made it difficult to proceed.”
The government aimed to introduce bioethanol for three key reasons. Firstly, amid the call for industrial changes to achieve carbon neutrality, there was a consideration of bioethanol as a potential alternative. Secondly, recognizing the risks associated with indigenous energy sources during geopolitical crises such as the Russia-Ukraine war and the Israel-Hamas conflict, there was a need for strategies to address inflation in Korea, which relies excessively on petroleum. Lastly, the government anticipated potential benefits in trade relations with the U.S. through increased domestic adoption of bioethanol, as the U.S., a major exporter of grains like corn, could see immediate gains from the growing demand.
However, the petroleum industry has consistently opposed the adoption of bioethanol, stating there’s no compelling reason. Unlike biodiesel, which can be produced in-house by petroleum refineries, bioethanol requires external procurement, raising supply chain concerns. Bio-diesel is produced by extracting vegetable oils from crops like oil palm, soybeans, and rapeseed. It is then blended with diesel for use, and domestic cultivation is possible using some raw materials, thanks to readily available production technology. In contrast, bioethanol heavily relies on imported crops, primarily from the United States and Brazil.
Kim Jae-kyung, a senior research fellow at the Korea Energy Economics Institute, explained, “Bioethanol, essentially dependent on grains, must be acquired from distilleries or imported from overseas. Petroleum companies are inclined towards in-house production for blending rather than purchasing.”
An industry insider commented, “Adding 3% bioethanol reduces petroleum usage by 3%. In reality, petroleum companies see it as a loss with no tangible benefits.” Another industry source said, “Bioethanol is blended with gasoline for use, but its significance is not prominently emphasized, given the consistent shift toward hybrids and electric cars in the gasoline vehicle market.”
