[C Tech Now] China Achieves First Successful Test Cost Using Self-Produced SAF, Chase Has Begun

The World's Largest Used Cooking Oil Exporter Advantage
'No.1 in Aviation Fuel Exports' Korea Needs Countermeasures

On June 5th, a Chinese C919 passenger aircraft at Dongying Airport in China is preparing for a test flight using sustainable aviation fuel (SAF) produced by Sinopec. Photo by Sinopec

On June 5, the Chinese-made large passenger aircraft C919 took off from Dongying Airport in Shandong, China. It was the first test flight using sustainable aviation fuel (SAF) produced by the Chinese state-owned oil company Sinopec. On the same day, another Chinese aircraft, the ARJ2, successfully completed a test flight at Shanghai Pudong Airport using SAF supplied by Sinopec. Sinopec explained that using its SAF made from used cooking oil (UCO) can reduce carbon emissions by more than 50% compared to conventional aviation fuel.

According to the International Energy Agency (IEA), South Korea ranked first worldwide in 2022 by exporting 10.803 million tons of aviation fuel. However, concerns are growing that South Korea’s dominant position in aviation fuel could be threatened as SAF expands. SAF differs completely from the traditional refining business, which imports crude oil, refines it, and then exports it, in terms of raw material supply and technology. As countries around the world are actively moving to secure the SAF market, voices are growing louder that South Korea must quickly prepare countermeasures.

Securing raw materials such as used cooking oil and agricultural by-products for SAF is not easy. In this regard, China has recently attracted attention. Bloomberg recently quoted an executive from Cathay Pacific Airways saying, "China could stimulate the SAF market just as it did with electric vehicles."

China has the advantage of abundant SAF resources such as used cooking oil. China is also the world’s largest exporter of used cooking oil. In fact, Cathay Pacific recently signed a memorandum of understanding (MOU) with China’s State Power Investment Corporation (SPIC) for SAF supply. SPIC plans to build a plant capable of producing 50,000 to 100,000 tons of SAF by 2026.

Major foreign media reported in May that Chinese biofuel companies plan to invest $1 billion (about 1.38 trillion KRW) to build a plant capable of producing 1 million tons of SAF by 2025.

Currently, the global leader is Neste of Finland. Neste is already mass-producing SAF at plants in Singapore, the Netherlands, and other locations. The Singapore plant can produce up to 1 million tons of SAF annually. Neste plans to expand renewable fuel production to 6 million tons by 2026, with 33% of that being SAF. In addition, global oil companies such as ExxonMobil (USA) and BP (UK) are moving quickly to produce SAF.

Neste, a Finnish company, operates a factory in Singapore. This facility can produce 1 million tons of Sustainable Aviation Fuel (SAF) annually. Photo by Neste

Domestic companies are also actively engaging in SAF, but they are just beginning to take steps.

HD Hyundai Oilbank exported SAF to the Japanese trading company Marubeni in June. This is the first time a domestic refinery has exported SAF. In addition, SK Innovation is building SAF facilities within the SK Ulsan Complex (CLX) with the goal of producing SAF by 2026. GS Caltex has been conducting a SAF pilot flight project with Korean Air since last year by supplying fuel from Neste. GS Caltex plans to build a biofuel refining facility in Indonesia in partnership with POSCO International.

South Korea only established the legal basis for the SAF business in January when the amendment to the Petroleum and Petroleum Alternative Fuels Business Act (Petroleum Business Act) passed the National Assembly. Previously, only natural raw materials could be used in petroleum refining processes, but the amendment allows the use of biofuels and renewable synthetic fuels.