‘Korea is shifting from biofuel importer to exporter,’ says Rystad analyst

Once a heavy importer of biofuels and raw materials for its renewable energy transition, South Korea is rapidly emerging as a biofuel exporter with the potential to become a major global supplier.

“Historically, Korea has acted as a major demand hub, relying on imports of biofuel feedstocks such as palm oil and used cooking oil (UCO), and end products from countries including China and Malaysia,” said Lars Klesse, an analyst at Oslo-based Rystad Energy’s global bioenergy market research division, in an interview with The Korea Herald in Seoul on Wednesday. “But now, with its advanced biofuel sector — primarily focused on Sustainable Aviation Fuel (SAF) and Hydrotreated Vegetable Oil (HVO) — Korea is gradually shifting towards becoming an exporter of feedstocks, alongside HVO and SAF end-products.”

Korea has already begun shipping UCO and SAF to diverse markets, including Europe, North America and Japan, signaling a notable shift in trade flows. The change comes as Korea treats more UCO domestically for use as a feedstock, and China, traditionally the dominant supplier of biofuel feedstocks, cuts its exports to fuel its own SAF and HVO production.

“This creates a significant opportunity for Korea to expand feedstock and SAF exports and meet rising global demand,” Klesse noted.

The European market presents one of the biggest opportunities, with its expanding biofuel blending mandates requiring higher proportions of renewable fuels in transport to meet decarbonization targets.

Europe’s willingness to pay premiums, backed by penalty mechanisms for non-compliance under the ReFuelEU Aviation regulation, could allow Korean producers to secure long-term supply deals. Fuel suppliers in the EU who fail to meet quotas face fines at least double the price gap between SAF and kerosene, multiplied by the shortfall.

Domestically, Korea has introduced a mandate requiring a 1 percent SAF blend for all international flights from 2027. Yet refiners are pushing back, citing squeezed margins from the ongoing US tariff war and limited investment capacity. But on the other side, critics point out that Korea’s target lags Japan, which requires a 10 percent SAF blend for both domestic and international flights by 2030.

Despite these hurdles, Klesse argued that Korean refiners should aim to become early frontrunners in sustainable aviation fuel production.

“Once capacity is ready, refiners could lock in supply contracts with global airlines for the next seven, 10 or even more years,” he said.

He added that if Korea raises its ambition to match Japan, it will need to diversify beyond the conventional HVO pathway. Japan, for example, supplements HVO with the Alcohol-to-Jet method, converting ethanol into jet fuel, while offsetting higher costs through government support and international partnerships, particularly with the US.

“Korea has the industrial base and the market access to compete globally,” Klesse said. “What it needs is stronger policy ambition and investment to seize the moment.”