[Energy Odyssey]⑥Extracting Oil from Waste Plastic... Pyrolysis Oil Industry Restarts

Ⅱ. Overcoming the Energy Crisis Through Technological Innovation

Pyrolyzing Waste Plastic to Reproduce Naphtha

Pyrolysis Oil Production Rises for Third Consecutive Year

"Low Profitability" Slows Growth Trend

Government Support Expected for Energy Security

Editor's NoteAmid the recent Middle East war-triggered supply chain crisis and large-scale government megaprojects, the importance of energy has never been greater. South Korea, which relies on overseas sources for the majority of its primary energy, faces the difficult task of achieving energy security, carbon neutrality, and economic growth all at once. Reporters who cover the energy sector on the ground for both government and industry will be running a series exploring diverse current issues and seeking alternatives.

The pyrolysis oil business, which extracts oil products such as naphtha from waste plastic, is gaining attention as a potential game changer that can both reduce dependency on fossil fuels and bolster energy security. For South Korea, which is highly dependent on imported feedstock for petrochemical products, this could be a breakthrough. The pyrolysis oil industry, which had recently been flagging, is once again in the spotlight as the Middle East energy supply chain crisis drags on.

According to the Ministry of Climate, Energy and Environment on September 26, South Korea's annual production of pyrolysis oil has increased in each of the past three years, amounting to 24,677 tons in 2023, 39,302 tons in 2024, and 47,199 tons last year. However, the growth rate has somewhat slowed. The year-on-year growth from 2023 to 2024 was 59.3%, but from 2024 to 2025, it was only 20.1%.

Turning Waste Plastic Back into Plastic

Pyrolysis oil is a feedstock produced by heating discarded plastics, such as waste vinyl and plastic, in an almost oxygen-free environment to break them down. The gases and vapors generated in this process are then cooled and recovered in liquid form. This method breaks long molecular chains in plastics into smaller hydrocarbon molecules using heat, essentially reverting waste back into a crude oil-like state that can be used to reproduce plastic. Although the yield of the pyrolysis oil manufacturing process varies depending on the quality of raw materials, it is generally known to range from 35% to 65%.

The pyrolysis oil production process begins with the sorting of waste plastics. Discarded vinyl, packaging films, containers, bottle caps, and other synthetic resins produced by households, businesses, and industries are collected and moved to sorting facilities. Here, impurities such as metals, glass, paper, and food waste are removed, and usable raw materials are selected according to material and condition. After selection, the recyclables undergo washing, drying, and size adjustment before being sent to pyrolysis facilities. Rather than simply burning plastic, pyrolysis involves heating the waste in an almost oxygen-free environment to break down the long polymer structures into small hydrocarbon molecules. The recovered pyrolysis oil is filtered to remove moisture and fine solids, and its properties and impurity levels are measured to determine if it can be used as feedstock in refining and petrochemical processes.

A portion of the oil fractions produced during pyrolysis can be further refined into naphtha, which is used as a feedstock in the petrochemical industry. Naphtha-grade materials are subsequently converted in petrochemical processes such as steam cracking to basic substances like ethylene and propylene. These are processed further to become the raw materials for a wide variety of products including plastics, synthetic resins, packaging, and everyday items.

Interest in pyrolysis oil rose sharply with the surge in plastic use. During the COVID-19 pandemic, the problem of plastic waste management became particularly pronounced. According to Greenpeace’s "Plastic Korea 2.0 Report," the total amount of plastic waste generated in South Korea in 2021 was 11,932,000 tons, up 49.5% since 2017. From 2019 to 2021, the amount of synthetic plastics in household waste steadily increased. Notably, the category 'other synthetic resins,' which includes food delivery packaging, jumped by 80.6% from 715.5 tons per day in 2019 to 1,292.2 tons per day in 2021.

The challenges of plastic waste treatment through incineration or landfilling grew more acute during the pandemic. In response, the refining and petrochemical industries began exploring ways to blend pyrolysis oil from waste plastics into traditional feedstock. Between 2021 and 2023, major industry players rushed to enter the pyrolysis oil business.

Eco-friendly Consumption Fell Short of Expectations

Recently, however, refining and petrochemical companies have been mainly maintaining existing pyrolysis oil production rather than expanding it. The cost of production using this method is actually higher than conventional plastics manufacturing, resulting in weaker price competitiveness and diminished momentum to scale up. In particular, domestic business conditions worsened as cheaper Chinese petrochemical products flooded the market, making it even more difficult to expand pyrolysis oil projects.

GS Caltex, which had intended to build a pyrolysis oil plant, now sources all of its pyrolysis oil from external suppliers. A GS Caltex representative said, “We are continuously reviewing direct investment plans for pyrolysis oil, taking into account advancements in technology, regulatory implementation speed, and market conditions.” LG Chem has also decided not to pursue commercial operation at this time and is currently using pyrolysis oil purchased from outside suppliers.

SK Geocentric is focusing on verification of its technology and development (R&D) for a pyrolysis oil facility in Ulsan, rather than proceeding directly with plant construction. A spokesperson from SK Innovation explained, “With the global economic downturn and sluggish demand for recycled products, we are unable to proceed with mass production, but we continue to develop technology for commercialization at any time.”

Middle East Crisis Brings Pyrolysis Oil Back into the Spotlight

As the Middle East crisis has made naphtha procurement more challenging, attention is once again returning to pyrolysis oil technology. About 55% of South Korea's naphtha demand is met by domestic refiners, while the remaining 45% relies on imports. Even the naphtha supplied by local refiners comes from refining imported crude oil, making it accurate to say that the country depends entirely on imports for naphtha.

Meanwhile, industry is pressing on with self-help measures. HD Hyundai Oilbank is expanding its business foundation by examining direct production and pre-treatment facility investments for pyrolysis oil. The company produces circular naphtha and other products by feeding pyrolysis oil—obtained via high-temperature, oxygen-free decomposition of waste plastics and tires—into its refining process. Since 2024, it has formed a business agreement with Hyundai Department Store for a plastic circular economy, converting waste vinyl collected by Hyundai Department Store into eco-friendly materials through pyrolysis. After processing 54 tons in 2024, last year the company sourced 130 tons of waste vinyl from Hyundai Department Store as feedstock for supplying new eco-friendly vinyl at Hyundai Department Store locations.

Commercialization has advanced to even more eco-friendly methods, such as generating naphtha (urban oilfields) through wave energy emitted by ceramic wave balls, or chemically decomposing waste plastic into fine powder to filter out only hazardous substances and then chemically recombining the powder into pellets (raw materials for plastic granules) using depolymerization. SK Chemicals, which uses the depolymerization method, produces a variety of products including cosmetic containers, food and beverage packaging, fibers, records, automobiles, and tires. The company began producing 16,000 tons annually at its plant in China, with plans to scale up to 32,000 tons per year.

The core issue for naphtha derived from pyrolysis is not the technology, but cost competitiveness and marketability. Given that South Korea produces no crude oil domestically, there are growing calls for large-scale government support as this approach offers both an eco-friendly solution and a means to secure oil products.

Jisoo Lim, partner at EnerChem Insight and former head of the chemical division at LG Economic Research Institute, stated, “For companies engaged in the pyrolysis oil business, the greatest challenge is the pre-processing of plastics. Local governments need to provide infrastructure and improve collection systems as a practical solution. The necessary technologies are already in place, so additional institutional supports are required.”

The government intends to aggressively support the expansion of the pyrolysis oil industry. It has allocated KRW 3 billion (approximately 3 billion won) in next year's budget, which has been submitted to the National Assembly for high-efficiency continuous pyrolysis oil production. Most domestic pyrolysis oil facilities are currently batch-based, where feedstock is loaded all at once, processed for a set period, and then all product is retrieved at the end. While this makes it easy to control reaction time and conditions, it is not suitable for mass production, and additional time is required between batches for cleaning and preparation. The Ministry of Climate, Energy and Environment is reviewing plans to support companies with continuous facilities capable of 24-hour extraction to enhance efficiency. Additionally, it is worth considering legislative options, as done in the European Union, to mandate the use of recycled plastic content for major items such as packaging and automobiles.

This content was produced with the assistance of AI translation services.