S. Korea to boost biodiesel by 2012

South Korea's energy ministry said today that the country plans to raise biodiesel content in domestic diesel to 3 percent from the current 0.5 percent by 2012, while extending tax breaks for biodiesel fuel until 2010.

Last year, the country announced that all domestic diesel must have at least 0.5 percent biodiesel content.

Today's numbers were less than expected, as some in the industry predicted the government would boost the ratio to 5 percent as early as next year.

The Ministry of Commerce, Industry and Energy said it plans to raise the content ratio to 5 percent in the long run, but for right now it's sticking to 3 percent.

The ministry said it would take another look at the plan in the second half of 2010.

A mandatory 5 percent blend would have been in line with the level proposed by the European Union by 2010.

France currently mandates a 2 percent blend, and German imposes 3.6 percent, while new rules just took effect in the U.S. requiring 4.2 percent of the fuel sold or dispensed this year to come from renewable resources (see U.S. renewable fuels standard takes effect).

The South Korean government allocated $2.8 million earlier this year for rapeseed production as part of its effort to cut the country's dependency on foreign raw materials.

Currently, 16 domestic firms, including SK Chemicals and Aekyung Petrochemical, are registered with the government to produce biodiesel, according to the ministry.

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