It won’t be long before your favorite airline will be offsetting their carbon dioxide emissions with carbon credits. You have CORSIA to thank for that.
International flights emitted a total of 491.6 million metric tons of carbon dioxide in 2023. This makes up 2.5% of global carbon emissions.
CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation, was introduced to mitigate the aviation industry’s impact on climate change. In addition to proposing a carbon credit offsetting process, they issued other necessary systemic calls to action, like encouraging airlines to incorporate more sustainable aviation fuel in their operations.
With this global incentive to offset carbon emissions, what does that mean for you and your carbon credit business?
Keep reading to find out.
In this blog, we’ll provide a brief overview of CORSIA, unpack the impact it’ll have on the market for carbon credit project developers, and outline CORSIA-eligible credit requirements.
With this information in your toolkit, you and your carbon projects will be ready for take off.
A Brief Overview of CORSIA
CORSIA is a global initiative for international airlines to offset their carbon emissions led by the International Civil Aviation Organization (or ICAO) — an agency of the United Nations.
The goal of CORSIA is to cap international aviation carbon emissions at 85% of 2019 emission levels until 2035. The international flights between countries that choose to opt into CORSIA must, therefore, choose to follow CORSIA rules.
CORSIA doesn’t replace domestic emission systems countries have at home. For example, Europe uses its ETS system to manage carbon emissions for flights within its borders. Even if they’re flying to a non-CORSIA country, they’re still following the ETS system if they depart from Europe. Another example is that the US has EPA aircraft emissions standards that aviation bodies have to follow for all domestic flights. Therefore, we can understand that CORSIA is in effect only when there is an international flight between two CORSIA-participating countries.
You can see a map of countries that have chosen to be a part of CORSIA regulations below.
Source: IATA
CORSIA is divided into three phases that require more and more buy-in:
- Pilot Phase: 2021-2023 (voluntary participation)
- Phase 1: 2024- 2026 (voluntary participation)
- Phase 2: 2027 - 2035 (mandatory participation)
The main difference between the Pilot Phase/Phase 1 and Phase 2 is that participation in the Pilot Phase/Phase 1 is voluntary, while participation in Phase 2 is mandatory (except for some exempt countries). In other words, once Phase 2 kicks in, we’ll especially start seeing a lot of carbon offsetting in the international aviation industry.
Beyond all that, they also hope to achieve “net-zero carbon emissions” by 2050 in the international aviation scene. This also aligns with the UN’s global net-zero emissions goal, which aims for 2050 as well.
The CORSIA Market
It’s no surprise that many airlines will turn to carbon credits (in addition to other solutions like sustainable aviation fuel or SAF) to meet emissions goals. So, thanks to CORSIA, the market is ripe for the taking.
The carbon credit market can reach as high as $2B in the first phase alone. There are currently over 200 million CORSIA-eligible credits for the first phase to answer an estimated market need for 100 million credits.
But it won’t be long before there is more demand than there is supply.
By the time CORSIA is in Phase 2 and airlines are required to cap their emissions, there might be 14x the demand than there are eligible credits. While not great for airlines ill-prepared to decarbonize, this is promising news for project developers looking to expand.
Plus, since there will be more demand, CORSIA eligible credits can reach a higher value, providing more opportunity for project developers to drive the carbon financing back into the project’s local communities.
In Phase 1, CORSIA-eligible carbon credits have a wide price range, with credits costing anywhere from $18-$51 per tonne of CO2e. As supply dwindles, it can rise to $27-$91 in Phase 2.
The most notable (and the first) CORSIA credit issuance for Phase 1 was the issuance of forestation conservation credits issued by the government of Guyana in February 2024. These credits focused on maintaining Guyana’s forests and the critical biodiversity within them. They followed the ART TREES methodology, which only provides credits at the jurisdictional level and mainly to national governments.
The majority of Phase 1 supply was positioned to come from this project before ICAO deepened the supply pool by approving more methodologies in October 2024.
Potential CORSIA Market Roadblocks
The supply and pricing that we just discussed can be impacted by agreements made between CORSIA and the EU’s Emissions Trading System (or ETS). If European airlines choose to opt out of CORSIA and cover international flights from Europe purely with the ETS, it could lower the overall demand for CORSIA credits by 25-50% by 2050. It would also be much costlier for aviation companies. By 2030, airlines under the EU ETS will be paying for 100% of their emissions, but under CORSIA, they'll only need to offset about 20% of emissions. The way that these systems will work together is still a part of ongoing discussion.
Another potential impact is if the United States of America decides to no longer participate in CORSIA. America’s severance from CORSIA could cut the CORSIA credit market down by a third. However, if they do withdraw, the EU might extend its ETS to cover transatlantic flights, which would impact flights from America to the EU. This would put international flights from America under those steep ETS prices we mentioned earlier.
CORSIA-Eligible Credit Requirements
It’s been established that CORSIA-eligible credits are in high demand, but what makes a project CORSIA-eligible?
According to BeZero, the regulatory requirements that credits must meet to be CORSIA-eligible in the first phase are:
- The earliest eligible vintage year is 2021
- Can only be issued by registries that have been approved by the CORSIA Technical Advisory Body (TAB)
- Must follow any methodology-based restrictions
- Must have a LoA1 from the country the project is hosted in that sanctions corresponding adjustments
This filters out a lot of potential credits in the VCM. The LoA regulation, in particular, has been a difficult hoop for carbon project developers to jump through. However, as more and more registries and methodologies get approved, the amount of eligible credits will widen.
The CORSIA TAB released an informal table outlining tentative registration eligibility for emissions credits that we’re providing below:
Source: ICAO
As you can see, there are six eligible standards programs for Phase 1, and more recommendations are expected to be released in 2025.
The key thing to keep in mind is that airlines of participating countries looking to meet these emission targets in Phase 1 must purchase and retire these credits by January 2028.
So, the time to buy (and sell) is upon us.
Be CORSIA Ready
As CORSIA grows, so should you.
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Sign up for a Catalyst demo here and see for yourself what we’re talking about.
