SK Energy's new plant for sustainable aviation fuel (SAF) in Ulsan is due for commercial operation starting next month. Courtesy of SK Energy

Major refiners in Korea are bolstering manufacturing infrastructure for sustainable aviation fuel (SAF) as the government has recently announced mandates to require a certain portion of the low-emission fuel to be used by national airliners, according to the companies, Friday.

The companies' moves come as the country's SAF market value, according to the industry experts, is now anticipated to skyrocket from 1 trillion won ($751 million) in 2021 to 28 trillion won in 2027 on soaring demand.

The first-mover in the country's SAF market is SK Energy. SK Innovation, the firm's parent company, said it has introduced an SAF manufacturing plant inside the company's refinery complex in Ulsan and plans to begin its commercial operation next month.

The country's first SAF plant implements a "co-processing" method. By installing a separate 5 kilometer-long pipeline at a biofuel storage tank to feed biofuels like cooking oil waste or animal fat to an existing petroleum refining facility, the company can process for SAF and petroleum products simultaneously.

With the new plant, SK Energy said it possesses a complete value chain across material supply to manufacturing and sales. It also acquired in June the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), an emissions mitigation certification issued by International Sustainability & Carbon Certification.

A Boeing 777F of Korean Air is being fueled with GS Caltex's SAF, Sept. 5, 2023. Courtesy of GS Caltex

"With the new plant that can produce SAF continuously, we can preemptively prepare for the government's latest SAF requirement and supply the fuel to airliners without delay," said Hong Gwang-pyo, chief of SK Energy's strategic operation division. "We might expand our SAF manufacturing capacity further depending on policies to be newly made by the government or outside the country."

S-Oil, which on Sept. 1 sealed the country's first deal to supply SAF to Korean Air for its flights between Incheon and Tokyo, also plans to launch a manufacturing plant dedicated to the fuel. The company's CEO Anwar A. Al-Hejazi said on Aug. 30 he was considering introducing the plant to expand its SAF supply both domestically and abroad.

HD Hyundai Oilbank, which recorded the country's first SAF export in June to Japanese conglomerate Marubeni, plans to start building a manufacturing plant for SAF and other aviation biofuels using hydrotreated vegetable oil (HVO), with its completion set for 2027. GS Caltex is also on track to enter the market, according to the market observers.

On Aug. 30, the Ministry of Trade, Industry and Energy and the Ministry of Land, Infrastructure and Transport signed memorandums of understanding with the country's major refiners and airport authorities to mandatorily use SAF for 1 percent of jet fuel for all national airliners' flights starting in 2027. According to the International Air Transport Association, the measure can cut carbon emissions by up to 80 percent compared to traditional fuels.

The move followed the National Assembly's passage of the Petroleum and Alternative Fuel Business Act in January.