Ministry of Trade, Industry and Energy

Korea’s Trade, Industry and Energy Minister Dukgeun Ahn and Land, Infrastructure and Transport Minister Park Sang-woo jointly announced the Sustainable Aviation Fuel Diffusion Strategy today at the Incheon International Airport Terminal 2 with the participation of oil refinery and aviation industry personnel.

Sustainable aviation fuel (“SAF”) is an eco-friendly fuel produced based on biomass derived from animals and plants and the carbon captured from the atmosphere. Using SAF for powering air transport can reduce up to 80 percent of the carbon emissions released from using fossil-based jet fuels. Further advantages of SAF include the exclusion of fossil fuels, its similar chemical makeup to conventional aviation fuel, and that its use does not require the altering of aircraft structures.

SAF is recognized as the most effective aviation means of decarbonization, with 19 countries worldwide currently using SAF for commercial flights, some of which have mandated the use of blended SAF. Korea is now the 20th country in the world to incorporate SAF for commercial flights.

As Korea is the world’s top exporter of aviation fuel and as global SAF demand is expected to increase to 18.4 million metric tons by 2030 (according to International Air Transport Association), the situation calls for bold policy support to claim the SAF market, which is viewed as the new growth engine of the future.

The Ministry of Trade, Industry and Energy (MOTIE) and the Ministry of Land, Infrastructure and Transport (MOLIT) have made effort to closely communicate with oil refinery and aviation industries, related institutions, and relevant experts to establish the SAF Diffusion Strategy (“Strategy”) outlining Korea’s mid-to-long term vision and comprehensive support measures for invigorating the domestic SAF industry.

First, the commercial use of SAF begins August 30, 2024. Across the nation’s airports, domestic airlines are to use SAF produced in Korea and certified by the International Civil Aviation Organization (ICAO) in operating international regular flights. Domestic airlines can freely determine the details concerning air routes and SAF blend ratios and enter SAF purchase contracts with domestic oil refineries.

Second, the Strategy aims to promote the voluntary use of SAF by 2026 through public-private cooperation. MOTIE, MOLIT, domestic carriers, oil refinery companies, Incheon International Airport, and the Korea Airports Corporation (KAC) signed a memorandum of understanding (MOU) today on using SAF for commercial flights. The objective is to advance mutual cooperation in expanding the SAF diffusion throughout Korea. MOLIT and Incheon International Airport plan to offer various incentives to airlines that use SAF for their flights.

Third, the Strategy will be imposing a SAF blending mandate on all international flights departing from Korea beginning 2027, the year when international flight carbon regulations are scheduled to tighten. This comes against the backdrop of the ICAO requiring all member countries to comply with its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Fourth, related ministries will promote investment for expanding SAF production. To accommodate companies’ timely investments in R&D and infrastructure, the Government is mulling measures to increase investment tax credit and offer incentives in the future to lessen the pressure from high SAF production costs. 

Fifth, the Strategy will help to upgrade Korea’s technological capacity to produce SAF from a wide variety of raw materials. MOTIE will launch joint investigations on overseas bio resources like used cooking oil, animal fat, and palm oil residuals that can be repurposed through existing technologies.

Sixth, MOTIE will work on strengthening the competitiveness of the entire biofuel supply chain. The Korea National Oil Corporation (KNOC), large-sized and middle-market companies, and SMEs will form a consortium to source raw materials from abroad and establish infrastructure for storage and logistics. Based on corporate demand, the ministry will also support the integration of core SAF infrastructure, including facilities for the collection, treatment, and refining of bio raw materials, as well as SAF production plants and research institutions.

Seventh, MOTIE modified the legal and institutional framework through the partially amended Petroleum and Alternative Fuel Business Act (implemented August 7, 2024), such as preparing legal grounds for support projects spanning the entire life cycle from securing of raw materials to commercialization, in addition to designating institutions for project management. Going forward, the ministry intends to lay down SAF quality standards and conduct blend verifications.

Minister Ahn highlighted the importance of establishing a one-stop system for supplying aviation fuel and SAF in the future to guard and bolster Korea’s leading position in the global market. He added that whole-of-the-government efforts will be made to implement the Strategy and push additional support measures through close cooperation with oil refinery and aviation industries.