Korean Air announced that it held a ceremony on September 5 at Incheon International Airport with GS Caltex to mark a demonstration flight using sustainable aviation fuel (SAF). The photo shows SAF being refueled into a Korean Air Boeing 777F cargo aircraft for the test flight. (Photo provided by Korean Air)
SEOUL, Sept. 22 (Korea Bizwire) — South Korea’s oil refiners are ramping up investment in sustainable aviation fuel (SAF) as the government prepares to mandate blended fueling for all international flights starting in 2027. Industry leaders warn, however, that the high upfront costs and uncertain global demand mean state support will be critical.
SK Energy has taken the lead, investing 15 billion won ($11 million) in its Ulsan complex to establish an annual 100,000-ton SAF production line using a co-processing method that blends bio-feedstocks such as used cooking oil with crude oil.
The output, the company said, could cut carbon emissions by 300,000 tons a year. Since last year, SK has exported SAF to Europe and supplied domestic carriers including Korean Air and Jeju Air, while also securing contracts with Cathay Pacific.
GS Caltex has partnered with Finland’s Neste, the world’s largest biofuel producer, to supply and export SAF, including a 5,000-kiloliter shipment to Japan’s Narita Airport certified under the International Civil Aviation Organization’s CORSIA regime. The company is also preparing to expand supply following the government’s roadmap.
HD Hyundai Oilbank and S-Oil have similarly secured international certifications and begun exports to Japan and Europe, with both exploring dedicated production facilities to meet growing demand.
Refiners argue that government incentives will be decisive. Building a dedicated SAF plant costs about 1 trillion won ($720 million), they note, while feedstock procurement remains challenging. In contrast, the EU offers emissions credits to airlines using SAF, the United States provides $1.25–$1.75 per gallon in tax credits to producers, and Japan grants corporate tax breaks of up to 40 percent for SAF-related investment.
Despite mounting losses in their refining businesses—industrywide deficits reached 1.5 trillion won in the first half of 2025—South Korea’s refiners say they have little choice but to accelerate SAF development to protect the country’s status as the world’s top jet fuel exporter and meet tightening global climate regulations.
“The risks are high, but this is an unavoidable transition,” the Korea Petroleum Association said, urging lawmakers to include SAF in pending tax legislation designed to stimulate domestic production.
M. H. Lee (mhlee@koreabizwire.com)
