LG Chem initiates construction of South Korea's first "eco-friendly diesel" facility
In an ambitious move towards a greener future, LG Chem, a leading South Korean chemical company, has announced the construction of Korea's first hydrotreated vegetable oil (HVO) production facility. The new plant, being developed through a joint venture with Italian energy firm Eni, is set to produce 300,000 tons of HVO annually once completed in 2027.
The global HVO market is experiencing rapid expansion, driven by strong demand in biofuels, sustainable aviation fuel (SAF), and emerging applications such as eco-friendly plastics. Key trends include increasing investments in new production facilities, adoption in transportation sectors, and debates over its sustainability.
HVO, also known as green diesel, is produced by breaking down vegetable oils with hydrogen. It is more stable and performs better at low temperatures compared to biodiesel, making it an attractive renewable diesel substitute. Major corporations, such as LG Chem and Eni, are constructing large-scale HVO/SAF plants. For instance, Korea's first HVO/SAF plant, jointly developed by LG Chem and Eni, is expected to process 400,000 tons of renewable bio-feedstock annually by 2027.
The new facility will provide LG Chem with more affordable access to bio-based feedstocks for its chemical manufacturing operations. Until now, the company's operations have largely relied on imports from global suppliers. By producing HVO in-house, LG Chem aims to strengthen its global competitiveness through technological innovation and commercialization in eco-friendly fuel and bio-resources, including HVO.
LG Chem's CEO, Shin Hak-cheol, stated that the company is transforming its business portfolio towards low-carbon models, aiming for both sustainable growth and improved profitability. The company plans to respond proactively to customer demand by driving technological innovation and commercialization in eco-friendly fuel and bio-resources.
In addition to its use as a renewable diesel, HVO has potential applications in sustainable aviation fuel, car fuel, and bio-naphtha. LG Chem aims to convert bio-naphtha into high-performance plastics for use in home appliances, automobiles, sporting goods, and hygiene products.
The global HVO market is expected to grow at a compound annual growth rate of around 8.2 percent. Eni currently produces 2 million tons of HVO annually at its facilities in Italy and has an extensive global supply network. In 2025, the global HVO market is approximately $21.36 billion, and it is expected to expand to $36.86 billion by 2032.
However, environmental experts urge careful evaluation of feedstock sustainability and overall life cycle emissions to ensure genuine climate benefits. Some analyses caution about premature promotion of HVO as a "climate quick fix," noting that lifecycle emissions and sustainability depend heavily on feedstock sourcing and land-use impacts, and in some cases, HVO can be worse than fossil fuels if not carefully managed.
Several organizations and councils have switched vehicle fleets to 100% HVO to meet their net-zero targets, highlighting HVO's practicality as a renewable diesel alternative in sectors unable to electrify easily, such as waste collection and motorsports. The adoption in transport fleets, marine shipping, and aviation further underscores the growing importance of HVO in the global transition towards sustainable energy.
In conclusion, the HVO market is growing globally with significant investments in dedicated HVO and SAF production plants, expanding applications in road, marine, and aviation transport, and emerging roles in sustainable industrial processes. LG Chem's new HVO production facility is a significant step in this direction, positioning the company at the forefront of the global shift towards eco-friendly fuels and sustainable growth.
The rapidly expanding HVO market, driven by demand in biofuels and sustainable aviation fuel, has attracted major investments from corporations like LG Chem and Eni. As part of its strategic shift towards low-carbon models, LG Chem aims to commercialize eco-friendly fuel and bio-resources, including HVO and high-performance plastics for various industries like home appliances and automobiles.
The emergence of HVO as a potential substitute for fossil fuels in transportation sectors, marine shipping, and aviation, coupled with its technological applications in sustainable industrial processes, underscores the importance of HVO in the global transition towards sustainable energy.
