The government has decided to delay the announcement of the roadmap for the mixed use of sustainable aviation fuel (SAF) that was scheduled to be released this month. SAF must be used mandatorily starting in 2027, and the related industry is expressing concerns about the short preparation period.
According to the industry on the 27th, the government plans to announce the 'long-term roadmap for the implementation of the SAF usage mandate' as early as the third quarter. It was initially scheduled for release in the first half of this year, but has been delayed due to the early presidential election and changes in the Minister.
The government is establishing a task force (TF) for a mixed-use mandate of SAF jointly with the private sector to develop measures for the activation of SAF. More than 20 institutions, including domestic refineries and airlines, the Petroleum Management Organization, the Korea Transportation Safety Authority, and the Korea Energy Economics Institute (KEEI), are participating. The roadmap is expected to include incentive measures for SAF facilities and corporations.
SAF refers to aviation fuel made from renewable sources such as used cooking oil, biomass, palm oil byproducts, and cow and pig fat, contributing to the reduction of carbon emissions. It can reduce greenhouse gas emissions from aviation operations by up to 80%.
As the International Civil Aviation Organization (ICAO) leads the international aviation carbon reduction scheme, member country Korea must also use SAF mandatorily starting in 2027. The government has decided to increase the SAF blending ratio, beginning with a 1% mandate in 2027, 5% in 2030, 10% in 2035, 30% in 2040, and 70% in 2050.
Currently, no domestic refineries have SAF production facilities. While facilities for production are necessary, corporations are hesitant to invest in new facilities due to the poor refining market.
In the meantime, the government has proposed a maximum tax credit of 15% for investments in SAF production facilities, as well as reductions in airport facility usage fees at Incheon Airport. The industry believes that additional support measures are necessary. Refineries argue that diversification of raw material imports and policy financing for dedicated SAF production facilities are needed. Airlines also argue that additional incentives are necessary as they must use SAF, which is 3 to 5 times more expensive than conventional aviation fuel.
Governments around the world are introducing various policies to promote the distribution of SAF. The U.S. provides a tax credit of up to $1.75 per gallon (about 3.79 liters) for domestically produced SAF and is pushing for a subsidy program worth $1 billion (approximately 1.36 trillion won).
Japan is supporting up to 40% corporate tax deductions over 10 years and investing a total of 336.8 billion yen (approximately 317 trillion won) in facilities. The U.K. has introduced a system that guarantees revenue by compensating the difference when SAF prices drop. Other European countries provide subsidies for airlines purchasing fuel.