[Initial Perspective] SAF, To Be Truly Sustainable

"I wonder if we need an Air Fryer Ban Act or a 30 Chicken Promotion Act."

This was a joke made by an official from the petroleum industry I met recently while explaining the Sustainable Aviation Fuel (SAF) market. With the upcoming implementation of the 'SAF Blending Mandate System' starting in 2027, which requires all international flights departing from Korea to use blended SAF, the joke reflected the industry's difficulty in sourcing the raw material, waste cooking oil.

They said that even household waste cooking oil should be collected, but with the widespread use of air fryers, the use of cooking oil is gradually decreasing. The '30 Chicken' is in the same context. Unless there is a mandate to boil one pot of oil and fry only up to 30 chickens, it would be hard for waste cooking oil to suddenly increase. (To add, there is a franchise called '60 Chicken' that operates under the principle of frying only 60 chickens per 18-liter container of new oil.) Time passes relentlessly, and this reflects the industry's frustrating feelings as they find it difficult to find a proper solution.

How much waste cooking oil can be obtained in Korea? According to the 'Waste Cooking Oil Generation and Disposal Status' received by Democratic Party lawmaker Heo Jong-sik from the Ministry of Environment, 536,121 tons of waste cooking oil were generated domestically over five years from 2018 to 2022, averaging about 107,000 tons annually. Based on recycling status for soap and oil product manufacturing, fuel and energy recovery, fertilizer and feed, the estimated generation is 1,884,370 tons over five years, or about 376,874 tons annually. Even if the absurd ideas like the Air Fryer Ban Act or the 30 Chicken Promotion Act become reality, they would not help the industry much. It would only be a small accumulation of dust, not sustainable.

The most realistic and useful method is for the industry to build dedicated facilities for SAF. According to the industry, with 100 liters of waste cooking oil, current domestic refiners using existing facilities can produce less than 10 liters of SAF. The industry's only plan is to concentrate technology to increase yield so that more output can be obtained from the same raw material by building dedicated facilities. An industry official explained that the current yield, less than 10%, can be increased up to 60-80% through dedicated facilities.

Then why is the industry not rushing to build dedicated facilities for SAF, the most promising market? It is due to the burden of enormous investment costs in the trillions of won, characteristic of capital-intensive industries. The recent financial situation of the refining industry is also tight. Summarizing the earnings reports of the four major domestic refiners?SK Innovation, S-Oil, HD Hyundai Oilbank, and GS Caltex?the combined operating loss in the third quarter alone reached 1.4592 trillion won. This is the result of inventory losses due to falling international oil prices, exchange rate declines, and demand decreases caused by China's economic slowdown.

What the industry is waiting for are various incentives, including government-led investment tax credits. Europe, the United States, and Japan provide subsidies for production facility construction. The industry has requested the Ministry of Economy and Finance through the Korea Petroleum Association to newly designate SAF production as a national strategic technology. It is time for public-private cooperation and government support to make SAF truly sustainable, an inevitable trend that cannot be reversed.