SK Energy and Cathay Pacific Airways signed a supply agreement for sustainable aviation fuel (SAF) at Cathay Pacific’s headquarters in Hong Kong on March 10. This agreement, announced by SK Energy on March 11, will see the South Korean energy company supply over 20,000 tons of SAF to the Hong Kong-based airline by 2027. This collaboration marks SK Energy as the first domestic refiner to supply SAF to a Hong Kong airline, underscoring the growing importance of sustainable practices in the aviation industry.
The partnership between SK Energy and Cathay Pacific is not new. Since November last year, Cathay Pacific has been utilizing SAF supplied by SK Energy for all flights departing from Incheon International Airport. This move aligns with the broader industry trend towards reducing carbon emissions and complying with international environmental regulations. SAF, a biofuel produced from sustainable resources like waste oils and agricultural residues, is designed to significantly reduce carbon emissions compared to conventional jet fuel.
The signing of the agreement comes at a time when the global SAF market is poised for rapid growth. According to Global Market Insights, the market is projected to expand from $1.7 billion last year to $74.6 billion by 2034, with an average annual growth rate of 46%. This growth is driven by regulatory mandates and the aviation industry’s commitment to sustainability. The European Union has already mandated a 2% SAF blending starting this year, with plans to increase this proportion to 6% by 2030 and 70% by 2050. Similarly, the United States aims to replace all aviation fuel with SAF by 2050, and South Korea plans to mandate SAF blending for all international flights departing domestically starting in 2027.
SK Energy’s commitment to capturing the SAF market is evident in its strategic plans to strengthen cooperation with global partners. Lee Young-chul, head of marketing at SK Energy, emphasized the company’s proactive approach, stating, “We will closely monitor market conditions, including changes in domestic and international SAF policies and demand fluctuations, and work with strategic partners like Cathay Pacific Airways to build a stable global SAF supply chain.”
The Asia-Pacific region, where Cathay Pacific operates extensively, accounts for 80% of domestic refiner export volume, highlighting the strategic importance of this partnership. Hong Kong International Airport, ranked fifth worldwide in passenger numbers last year, serves as a major hub for international travel in the region, making it a critical point for implementing sustainable aviation practices.
SK Energy’s establishment of a mass production system for low-carbon products with an annual capacity of 100,000 tons in September last year further solidifies its position in the SAF market. The coprocessing method used by SK Energy integrates bio-feedstock into existing petroleum refining processes, allowing for an efficient transition from traditional fossil fuels to more sustainable alternatives.
