Korea Invests $174 Million to Turn Captured CO₂ into Jet Fuel and Synthetic Crude
- South Korea will invest 238 billion won ($174 million) through 2030 to demonstrate carbon capture and utilization technologies at industrial scale.
- LG Chem and POSCO Holdings will lead demonstrations using CO₂ from power generation and steelmaking to produce e-SAF, synthetic gas and marine fuel.
- The project links carbon reduction with energy security, as Korea targets domestic alternatives to imported crude oil and industrial feedstocks.
Korea Moves CO₂ Utilization from Lab to Industry
South Korea is launching a national carbon capture and utilization project aimed at turning industrial CO₂ into jet fuel, marine fuel, methanol and synthetic crude.
The Ministry of Science and ICT announced the CCU Mega Project at the Korea Institute of Energy Research in Daejeon on Tuesday. The program will run from 2026 through 2030. It will receive 238 billion won, about $174 million, in state funding.
The project targets CO₂ from high-emitting industrial sites. Instead of storing captured carbon, the government wants to convert it into commercial products. That includes sustainable aviation fuel, synthetic gas, methanol and eco-friendly marine fuel.
For Korea, the project is not only a climate policy bet. It is also an energy security strategy. The country depends heavily on imported crude oil and industrial feedstocks. Recent conflict in the Middle East has added pressure on policymakers to develop domestic alternatives.
LG Chem and POSCO to Lead Industrial Demonstrations
The government plans to focus early deployment on power generation and steel. These sectors remain central to Korea’s industrial base. They are also among the hardest to decarbonize.
LG Chem will lead the power generation track. The company will use CO₂ captured from thermal power plants to demonstrate production of sustainable aviation fuel and related products.
POSCO Holdings will lead the steel sector track. Its work will focus on CO₂ generated from steelmaking processes. The goal is to prove that emissions from heavy industry can become inputs for synthetic fuels and chemicals.
The two companies are expected to complete technology demonstrations by 2030. If successful, the project could create a domestic supply chain for low-carbon fuels and industrial feedstocks.
CCU differs from conventional carbon capture and storage. It treats CO₂ as a raw material rather than waste. That makes the commercial case more attractive, but also more complex. Production costs, clean hydrogen supply, certification and lifecycle emissions will decide whether the model scales.
Direct Air Capture and Synthetic Crude Take Center Stage
MSIT also demonstrated direct air capture technology at the launch briefing. DAC captures CO₂ directly from the atmosphere, where concentrations are roughly 0.04%, or 400 parts per million.
That makes the process technically difficult. Only about 400 CO₂ molecules exist in every 1 million air molecules. Capturing them requires energy, advanced materials and a clear route to commercial use.
The ministry also reviewed technology that combines captured CO₂ with hydrogen to produce synthetic crude. If scaled, the technology could produce 900,000 tons of crude oil annually by 2040.
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Government projections suggest CCU could substitute 10% of jet fuel and 48% of synthetic gas by 2050. Those figures show why Seoul is linking the project to both climate and energy policy.
The government also views advanced CCU, including DAC, as relevant to Korea’s 2035 Nationally Determined Contribution. That target requires the country to cut greenhouse gas emissions by about 400 million to 450 million tons.
Policy Support Builds Around a New CCU Industry
MSIT has been laying the groundwork for a broader CCU market. Through its CCU Initiative, the ministry has brought together industry, academic and research groups. The consortium has gathered input from companies and worked on market-building tools.
Those tools include a certification system for CCU technologies and products. The government is also developing a verification system for specialized companies. Both measures will matter for buyers, investors and regulators.
Certification will be especially important for aviation and shipping. These sectors face mounting pressure to reduce lifecycle emissions. They also need credible evidence that new fuels can meet climate and safety standards.
The government recently increased the project’s budget through a supplementary allocation. Funding rose by 22.4 billion won, from 20 billion won in the main budget to 42.4 billion won.
“To revitalize the CCU industry, we will expand investment in technology development and demonstration based on public-private cooperation, listen to the opinions of the industry, and actively support related technologies in taking root,” MSIT said.
What Executives and Investors Should Watch
For C-suite leaders, the Korean project shows how carbon management is moving into industrial strategy. CCU is becoming part of the discussion on fuel security, trade exposure and manufacturing competitiveness.
For investors, the near-term question is bankability. CCU projects need reliable CO₂ sources, low-carbon hydrogen, offtake agreements and credible lifecycle accounting. Without those elements, the economics may struggle.
For policymakers, Korea’s model offers a governance test. Public funding can reduce early-stage technology risk. Yet long-term demand will depend on standards, fuel mandates and carbon pricing frameworks.
The global significance is clear. Heavy industry, aviation and shipping all need scalable decarbonization options. Korea is now betting that captured carbon can become part of that solution, while also reducing exposure to imported fossil resources.
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