S-Oil begins supplying SAF to Korean Air, T’way Air

A view of the S-Oil Onsan Refinery, where sustainable aviation fuel is produced using the coprocessing method. [Courtesy of S-Oil Corp.]

S-Oil Corp. has begun supplying sustainable aviation fuel (SAF) to Korean Air Lines Co. and T’way Air Co., the first time domestically produced SAF is being used for commercial passenger flights departing from South Korean airports.

According to industry sources on Sunday, S-Oil will supply SAF to Korean Air for its regular Incheon-Tokyo Haneda route starting at the end of August 2024. T’way Air will receive weekly supplies of SAF for its Incheon-Kumamoto route in Japan starting Monday.

S-Oil’s SAF is produced through a “co-processing” method that uses bio-based raw materials in existing petroleum refining facilities. S-Oil became the first in the refining industry to operate facilities using bio-raw materials such as used cooking oil and palm oil by-products in January, and the company launched SAF production in April after obtaining the International Sustainability and Carbon Certification (ISCC) initiative’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) certification.

S-Oil’s push into SAF production is driven by growing demand thanks to global decarbonization policies and environmental regulations, particularly in the European Union (EU). According to the International Air Transport Association (IATA), SAF production needed to achieve the aviation industry‘s carbon neutrality target is projected to rise to 449 billion liters by 2050 from 23 billion liters in 2030. Market research firm Precedence Research forecasts the SAF market size will be nearly ninefold to $10.42 billion by 2031 from $1.25 billion in 2025.

The EU plans to mandate a 2 percent SAF blend for aircraft refueling at its 27 member countries’ airports starting in 2025, increasing to 6 percent by 2030, 20 percent by 2035, and 70 percent by 2050. The United States, the world’s largest aviation fuel consumer, offers a $1.25 per gallon tax credit for SAF that reduces carbon emissions by 50 percent under the Inflation Reduction Act (IRA).

Korea currently lacks dedicated SAF production facilities beyond co-processing methods. The estimated maximum domestic demand is 70,000 tons per year, about 1 percent of the 7 million tons of aviation fuel consumed in 2018. This is roughly 10 percent of last year’s global SAF production of 600,000 tons, highlighting the need for dedicated facilities. SAF production costs are up to three times higher than conventional aviation fuel. “A dedicated production facility can handle several hundred thousand tons, which would secure cost competitiveness,” an industry insider said.

S-Oil is likely to accelerate plans to build these SAF facilities. “We are considering dedicated SAF production facilities to expand stable supply in response to rising domestic and international demand,” S-Oil CEO Anwar Al-Hejazi said. The industry anticipates discussions on these facilities will gain momentum from 2026 onwards after the completion of its petrochemical facility construction project, known as the Shaheen Project.