Why should project developers be paying attention to CORSIA?
The aviation industry is under pressure to decarbonise — and fast. Through ICAO’s CORSIA scheme, international airlines must reduce emissions, adopt sustainable aviation fuels and offset what remains, by securing approved carbon credits.
As a result, demand for CORSIA-eligible credits is set to significantly increase but supply is expected to fall short. Read on to learn more about the requirements and opportunities for Project Developers in this space.
CONTEXT:
The International Civil Aviation Organization (ICAO) runs a compliance program for airlines called the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The goal of CORSIA is to stabilise airline industry emissions at 2019 levels. The scheme plays a pivotal role in the decarbonisation of the international civil aviation industry. Airlines have three pathways for compliance and they are encouraged to go through them in order (e.g. reduce, adopt, offset) to match up with the global emission mitigation hierarchy:
Reduce emissions by investing in cleaner and more efficient technologies;
Adopt greater usage of Sustainable Aviation Fuels (SAFs); and
Offset surplus emissions through carbon credits
Airlines are already rapidly working to reduce their emissions and use more SAF, but technology for airline decarbonisation isn’t sophisticated enough yet to get the job done alone. That means airlines must secure eligible CORSIA carbon credits to meet their compliance obligations. To be clear, CORSIA only covers international travel, not domestic. For 2025, there are 129 countries participating in CORSIA.
CORSIA is broken into three phases:
Pilot Phase – This spanned 2021 to 2023 and only covered flights between countries that had opted in to CORSIA.
Phase I - This spans 2024 to 2026 and only covers flights between countries that had opted in to CORSIA prior to Phase 1 beginning.
Phase II – This spans 2027 to 2035 and marks the beginning of mandatory compliance with CORSIA for all impacted airlines.
BIG DEMAND EXPECTED, LITTLE SUPPLY AVAILABLE:
Due to airlines’ large emissions profiles, it is expected that CORSIA will generate massive carbon credit demand. MSCI estimates airlines could generate cumulative demand for CORSIA-eligible carbon credits equivalent to 106-137 million tonnes of CO2 equivalent (MtCO2e) during Phase I (2024 to 2026) of CORSIA. That’s a lot of carbon credits. However, it’s worth noting that the political turmoil going on currently is creating a market cooling effect. Many airlines are taking a ‘wait and see’ approach before securing their required CORSIA credits. As a result, ClearBlue Markets are forecasting Phase I demand on the more conservative end, ~113 M2CO2e. Demand during Phase II of the scheme (2027 to 2035) according to MSCI could amount to 502-1,299 MtCO2e. ClearBlue Markets’ forecast falls on the higher end of this range due to the expected strength of CORSIA as it transitions to the mandatory phase.
This demand could exceed the supply of eligible credits. In a conservative scenario, MSCI expects cumulative supply could be as low as 94 MtCO2e during Phase I and 900 MtCO2e during Phase II. ClearBlue Markets expects demand to consistently outstrip supply year after year, from 2030. The requirement to acquire credits with a corresponding adjustment is expected to be the main limiting factor in regard to supply. (Learn more about corresponding adjustments in our blog here).
Modeling by MSCI Carbon Markets suggests CORSIA credits could command prices in the $18-51 USD range per tCO2e during Phase I and $27-91 USD during the latter stages of Phase II (2033 to 2035). ClearBlue Markets expects pricing to stay lower (~$20 USD per tCO2e) until early 2028. Early 2028 is significant as that is when the first CORSIA compliance deadline comes up. That means all the airlines taking the ‘wait and see’ approach will need to rapidly secure their credits to meet compliance.
With huge demand expected and strong price signals, this leaves a big opportunity for project developers willing to design projects to meet CORSIA criteria. However, this is certainly not an endeavor for the faint of heart for two big reasons:
There are several limitations regarding the types of CORSIA-eligible projects.
All CORSIA eligible projects must secure host country authorisations confirming that the host country will not count those carbon credits towards their own Nationally Determined Contributions (NDC) under the Paris Agreement. The even trickier element of securing the host country authorisation is ensuring that it is not revoked later and that it is enforceable.
COMMON QUESTIONS RELATED TO CORSIA ELIGIBILITY:
Q: Are there any types of projects that can receive CORSIA and ICVCM CCP labels?
A: Yes, but not many. It would have to be ART TREES crediting level, Verra JNR Scenarios 2a and 3, or Verra VM0048, where the project produces fewer than 7,000 credits per year. Vintage requirements would also need to be met.
Q: Why were engineered removals excluded from CORSIA approval?
A: CCS and engineered removals were broadly excluded from CORSIA approval in 2024. This is mostly due to the Technical Advisory Board (TAB) not having enough time to review methodologies under these project categories. It is expected CCS / engineered removals will be reviewed in 2025.
Q: Does the Letter of Authorisation (or equivalent document) need to specify which airline will use the specified credits towards CORSIA? Or can the authorisation simply state for use towards ‘Other International Mitigation Purposes’ (OIMP) with no end user?
A: This has not yet been clarified. Article 6.2 decisions at COP29 included one of the authorisations as ‘authorised entities’. What a specific entity is will vary from transaction to transaction. As it relates to CORSIA, it’s unclear if the authorisations can end at ‘use for OIMP’ or if a specific airline as the end user must also be authorised. Expect clarification in 2025.
Q: Is there a difference between ‘attestation’ and ‘authorisation’?
A: CORSIA explicitly uses the term ‘attestation’ instead of ‘authorisation’ to allow countries that are not part of the Paris Agreement to engage. This typically refers to any situation where you think a Letter of Authorisation is needed. An example of where this language choice will be useful - the USA left the Paris Agreement, but the US can still approve credits for use under CORSIA by providing the attestation.
FURTHER READING:
Our blog on CORSIA Phase I .
EcoSecurities’s Navigating CORSIA report for broader education.
MSCI’s CORSIA Costs and Implications report a deeper dive on market factors.
ICAO’s CORSIA Eligible Emission Unit summary table for a quick reference on what standards can be used for producing CORSIA credits.
ICAO’s full CORSIA Eligible Emissions Units report to get a complete breakdown of what methodologies/project types are allowed per standard.
Where REDD+ country exclusions are referenced, we recommend using the REDD+ countries as identified by UNFCCC. There is no definitive REDD+ countries list issued by ICAO or TAB, so this list represents a ‘best guess’ for interpreting the exclusions.