Korean Aviation and Oil Industries Prepares for Impact of the EU’s green jet fuel Mandate

Major South Korean refineries are keeping a careful eye on whether the European Union’s plans to put a new price on aviation fuel and mandate all flights inside its borders to use a specific quantity of sustainable aviation fuels or SAFs, would kick-start a new market for green jet fuels. 

Free emission permits for airlines will be phased out after 2026, according to a climate package announced by the EU last week, and a price on kerosene, the most prevalent aviation fuel, would be gradually adopted. In addition, by 2030, all airlines flying into and out of the EU will be compelled to utilize at least 5% of SAFs, rising to 62 percent by 2050. 

According to the Korea Energy Economics Institute, the EU’s aggressive policies could potentially drive up fuel costs by tens to hundreds of billions of won for Korea’s two national flag carriers, which spent a combined 5 trillion won ($4.6 billion) on fuel last year. SAFs are at least twice as expensive as typical aviation fuels. 

Korean Air recently partnered with Hyundai Oilbank to develop and sell SAFs in order to secure its own supply. Korea imports all of its SAF supplies from outside because it does not create any of its own. 

SAFs, which are made out of grains, plants, algae, and animal fats, can reduce carbon emissions by up to 80%, but they are three times the price of current aviation fuel. However, because aircraft operations account for 2 to 3% of global emissions, the aviation industry’s climate change strategy is crucial. 

Korea, as well as non-EU countries, are holding their breath and keeping a careful eye on the EU’s next action, as they are now free from the EU’s aviation standards due to a loophole. The rules only apply to aircraft that take off and land within the European Union. For example, a flight from Seoul to Paris or vice versa will be excluded from the requirements. However, the EU may in the future apply the system to a third country, so no one knows. 

It will be difficult to apply the policies to non-EU countries without causing diplomatic tensions. The European Union proposed to charge carbon emission rights to flights that fly through its territory in 2012, but the scheme was met with significant opposition from major nations like China. 

According to an official from SK Innovation, the EU’s new aviation laws will have no impact until they are implemented globally, similar to how the International Maritime Organization banned the sulfur content of ships’ fuel oil last year. 

The global transition to SAFs, on the other hand, has already begun, according to Hyundai Oilbank. 

Corsia is a method developed and led by the International Civil Aviation Organization of the United Nations to achieve carbon-neutral growth for international flights beyond 2020. Starting in 2027, all ICAO member states, including Korea, will be required to use the method. 

Airlines will either have to buy emissions reduction offsets from other sectors to compensate for any growth in their own emissions or use lower-carbon fuels that meet Corsia requirements after that. 

Photo Credit: https://phys.org/news/2021-07-eu-airlines-fuel-tax-climate.html