S. Korean oil, aviation industries brace for impact of EU’s green jet fuel mandate

South Korean airlines and oil refineries are awaiting whether the EU's initiatives on requiring all flights to use sustainable aviation fuels (SAFs) and imposing a new tax on kerosene will ignite a new market for green jet fuels.

The climate package announced by the EU last week stated that all airlines operating in and from the EU will be required to use at least 5 percent of SAFs in 2030 and 62 percent by 2050, while a tax on kerosene, the most common jet fuel, will be introduced.

EU’s aggressive policies can potentially drive up fuel costs of South Korea’s two national flag carriers, Korean Air and Asiana Airlines, by tens to hundreds of billions of won, as SAFs are three times more costly than typical aviation fuels.

While the policies only apply to flights that both originate and land inside the EU, they may be later be applied to countries outside the EU, according to a South Korean aviation industry official.

Korean Air and Asiana Airlines spent 5 trillion won on fuel last year.

South Korea relies solely on imports of SAF supplies.

To secure its SAFs supply, Korean Air collaborated with Hyundai Oilbank to manufacture and commercialize green jet fuels.

SAFs are made up of algae, grains, plants, and animal fats and can reduce a flight’s carbon emissions by up to 80 percent.