This is a milestone for the transition into sustainable international aviation. In this article, we’ll explain what CORSIA is, explore its role in aviation climate action, and dive deep into the recent ICAO approval of additional standards and its impacts on market supply. We’ll also explain how Article 6 rules are being leveraged within the context of CORSIA. Join us on this journey to learn more about CORSIA and recent developments!
The aviation sector plays a critical role in the global economy, facilitating trade, tourism, and connectivity. However, it is also a significant source of greenhouse gas emissions, accounting for approximately 2.5% of CO₂ emissions globally. This impact is projected to increase as demand for air travel continues to grow, with global passenger numbers expected to double by 2050. Unlike many other industries, aviation emissions are largely international, making it challenging to address through national policies alone. This global nature necessitates coordinated, industry-wide action to ensure that aviation can decarbonise impactfully.
Developed by the International Civil Aviation Organization (ICAO), the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is a United Nations initiative to limit CO2 emissions growth in the international aviation sector. Airlines can comply with CORSIA by using CORSIA-eligible fuels or credits.
CORSIA implementation is divided into three phases: the Pilot Phase between 2021 and 2023, Phase I between 2024 and 2026, and Phase II from 2027 onwards. This phased implementation of CORSIA aims to build up compliance requirements and accommodate the special circumstances and capabilities of states while minimising market distortion. CORSIA also adopted a route-based approach by which only international routes where both states are participating are covered by the offsetting requirements of the scheme.
To qualify for offset use under CORSIA, CORSIA-Eligible Emission units must originate from standards approved by ICAO and:
These principles are designed to uphold the environmental integrity of eligible units, supporting credible and accountable climate action within the aviation sector.
In October 2024, the ICAO Council granted full approval to four new carbon standards for Phase 1 (2024-2026 Compliance Period) of CORSIA. This decision follows conditional approvals given earlier this year, which were pending improvements to avoid double-counting and ensure compliance with emissions standards.
The newly approved standards include Gold Standard, Verra, Climate Action Reserve, and Global Carbon Council. Previously, only two standards, ACR and ART TREES, were fully approved, limiting credit options for airlines under CORSIA. These EEUs from the six registries can be issued to activities that started their first crediting period from 1 January 2016 and in respect of emissions reductions that occurred from 1 January 2021 to 31 December 2026. However, eligibility for each of the four newly approved standards includes exclusions for certain methodologies and activity types. See below for more information, a more detailed overview can also be accessed here (starting on page 13).
Note: All Eligible Emissions Units must be generated from an activity that started its first crediting periods in 2016 or later.
Programme
|
Compliance Period 2024 -2026 (First Phase)
|
| American Carbon Registry |
2021 – 2026 units
|
| Architecture for REDD+ Transactions | |
| Climate Action Reserve * | |
| Global Carbon Council * | |
| Gold Standard * | |
| Verra Verified Carbon Standard / Jurisdictional Nested REDD Programme * | |
| Isometric * |
Conditionally eligible pending further actions by the Programme. |
| BioCarbon Fund Initiative for Sust. Forest Landscapes | |
| Cercarbono | |
| Forest Carbon Partnership Facility | |
| Thailand Voluntary Emission Reduction Programme |
Source: South Pole adapted version based on CORSIA Eligible Emissions Units - Informal Summary Table
By expanding the pool of fully approved standards, ICAO will increase the supply of CORSIA Eligible Emissions Units for the aviation industry, potentially stabilising credit prices amid growing demand. This expansion may provide a larger scale of variety, increase liquidity, and encourage more airlines to meet compliance obligations earlier. However, the adoption of the mechanisms required by ICAO to enable credits being used for CORSIA compliance instead of towards NDCs is expected to take time, potentially impacting the short term availability of credits and standards' ability to meet demand.
Source: IATA Sustainability and Economics, from September 2023
Article 6 of the Paris Agreement and CORSIA are both key frameworks for addressing climate change - however, they focus on different sectors and have distinct structures.
The Paris Agreement is a global climate accord aimed at keeping the global temperature rise well below 2°C, and ideally limiting it to 1.5°C above pre-industrial levels. It covers all sectors and involves commitments from countries to reduce their overall emissions through Nationally Determined Contributions (NDCs), including domestic aviation. Meanwhile, ICAO through CORSIA covers the international aviation sector, which is not part of the scope of the Paris Agreement due to its transboundary nature.
Article 6 allows for the use of carbon markets to meet national and international climate targets. The finalisation of the Article 6 rules resulted in a formal relationship between Article 6 and the CORSIA scheme. The rules of the Paris Agreement outline that mitigation outcomes can generate “Internationally Transferred Mitigation Outcomes" (ITMOs). These can be sold for use towards the buy-side country's NDC, or towards CORSIA and certain other purposes. ITMOs require authorisation from the country in which the mitigation action took place, declaring that the emission unit will not be counted towards its NDC. Without authorisation from the government, airlines cannot use these emission units as offsets for CORSIA compliance. Only a limited number of countries currently have the necessary regulations and institutional frameworks in place to grant such authorisations.
The commercial implications of ICAO's decision on CORSIA-eligible emissions units for the 2024–2026 period are significant for the carbon markets and the aviation industry. Here are the key impacts:
The aviation sector faces mounting pressure to reduce carbon emissions and mitigate climate change impacts. CORSIA is a critical framework to address these challenges. With the newest updates, it is important to understand what opportunities lie ahead and develop the best procurement and investment strategy aligned with CORSIA.
South Pole supports aviation clients in meeting their CORSIA compliance requirements via strategic guidance and high-quality solutions. Our approach involves assessing each airline's specific obligations under CORSIA, developing tailored strategies to meet their needs, and providing access or investment opportunities to eligible carbon projects.
Additionally, South Pole is actively building a pipeline of CORSIA-eligible projects in countries such as Malawi, Chile, Thailand and many others, helping airlines align with CORSIA Phase I requirements. We work closely with airlines to ensure they are aligned with both CORSIA's current phase and its evolving future requirements, helping them navigate complex regulatory landscapes while maintaining sustainability leadership in the aviation sector.
