South Korean chemical giant LG Chem Ltd. is taking the first steps to internalize the production of bio raw materials needed to produce eco-certified products. The company announced Thursday that it will partner with Italy’s Eni Sustainable Mobility S.p.A. (Eni SM), a subsidiary of Italy’s state-owned multinational energy company Eni S.p.A., to establish a joint venture plant to produce hydrotreated vegetable oil (HVO) at its Daesan plant in South Chungcheong Province.
Eni Group has been promoting various sustainable strategies involving biofuels and renewable energy with the goal of achieving carbon neutrality by 2050. Eni SM is Eni Group’s subsidiary leading the eco-friendly fuel business centered on HVO.
In February, LG Chem and Eni SM signed a heads of agreement (HOA) to establish an HVO joint venture plant and are currently conducting technical feasibility and economic assessments. The exact investment amount in the joint venture is yet to be determined, but industry observers expect LG Chem to invest hundreds of billions of won in the effort.
The two companies aim to complete the 300,000-ton capacity HVO plant by 2026. It is the first time an HVO plant with capabilities for integrated production from raw materials to final product has been built in Korea.
HVO is a next-generation bio oil produced by adding hydrogen to vegetable raw materials such as waste cooking oil. It does not freeze even at low temperatures and can be used not only for vehicles but also as aviation fuel and a raw material for petrochemicals. The global market demand for HVO is expected to grow at an average annual rate of 20 percent to 40 million tons in 2030 from 9.7 million tons in 2021 as more renewable energy policies are implemented globally and using eco-friendly jet fuel and diesel becomes mandatory.
The collaboration between the two companies aligns the interests of LG Chem, which focuses on expanding products with vegetable oil applications that contribute to reducing carbon emissions and securing the necessary eco-friendly raw materials, with those of Eni SM, which aims to expand its next-generation biofuel business into Asia and the global market.
“We will be able to strengthen the base for our stable raw material supply in expanding our eco-certified products,” LG Chem vice chairman and chief executive officer Shin Hak-cheol said.