Ban on Biofuels Without Eco-Friendly Ingredients... Three-Year Extension for Support of Crude Oil Import Source Diversification

Amendment to the Enforcement Decree of the Petroleum Business Act Approved at the Cabinet Meeting

From now on, petroleum refiners using eco-friendly refining raw materials must report the details to the Korea Petroleum Management Service. Penalties will be imposed for supplying biofuels that do not use eco-friendly raw materials. The crude oil import diversification support system, which is scheduled to expire at the end of this year, will be extended for three years.

The Ministry of Trade, Industry and Energy announced on the 30th, at the Cabinet meeting, that the amendment to the Enforcement Decree of the "Petroleum and Petroleum Alternative Fuel Business Act (Petroleum Business Act)" containing these details was approved. This amendment is a follow-up measure to the Petroleum Business Act amendment promulgated last February and is scheduled to take effect from the 7th of next month.

The amendment to the enforcement decree specifies the types of petroleum alternative fuels by categorizing them according to the characteristics of raw materials, such as biofuels, renewable synthetic fuels, and other petroleum alternative fuels. Biofuels include biodiesel, bio heavy oil, bio jet fuel, bio methanol, and bio ethanol. Renewable synthetic fuels refer to renewable synthetic diesel, renewable synthetic jet fuel, renewable synthetic methanol, and renewable synthetic gasoline. Additionally, the Minister of Industry may designate "other petroleum alternative fuels" to contribute to carbon neutrality or improve energy use efficiency.

The amendment also allows for the designation of a dedicated institution to efficiently operate petroleum alternative fuel support projects and to promote support projects such as technology development, workforce training, and information collection. Furthermore, business operators must report the types of eco-friendly raw materials, supply and demand status, input processes, and production wells usage details to the Korea Petroleum Management Service.

Along with this, the amendment adds "types of petroleum alternative fuels manufactured or imported/exported" to the registration requirements for changes in petroleum alternative fuel manufacturing and import/export businesses, and establishes provisions prohibiting the supply of biofuels manufactured or utilized using non-eco-friendly raw materials.

The amendment also includes provisions to extend the crude oil import source diversification support system, which is scheduled to expire at the end of this year, by three years, considering the recent ongoing instability in the Middle East and the increasing dependence on Middle Eastern crude oil imports in Korea. This system refunds the excess transportation costs compared to Middle Eastern crude oil within the petroleum import levy limit (16 KRW/liter) when importing non-Middle Eastern crude oil. The proportion of Middle Eastern crude oil imports increased from 59.8% in 2021 to 67.4% in 2022 and 71.9% in 2023.

The Ministry of Trade, Industry and Energy stated, "We plan to promptly organize laws and systems necessary to activate eco-friendly petroleum alternative fuels," and added, "We will also promote support policies necessary for encouraging private investment and enhancing industrial competitiveness, such as tax credits and technology development, in cooperation with related ministries."

This content was produced with the assistance of AI translation services.