Decarbonising aviation: understanding the UN ICAO’s CORSIA Requirements and Market Challenges
The International Civil Aviation Organization (ICAO) introduced the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as a key measure to mitigate greenhouse gas emissions from the aviation industry. Launched in 2016 and implemented in phases starting in 2021, CORSIA aims to cap net CO₂ emissions from international flights at 85% of 2019 levels. This ambitious effort is a cornerstone of aviation’s contribution to global climate goals and is designed to complement technological, operational, and infrastructural improvements in the sector.
However, the implementation of CORSIA has faced numerous challenges, stemming from political uncertainties, bureaucratic hurdles, and market dynamics. This article provides an overview of CORSIA’s framework, its global adoption status, and the hurdles it faces, while offering updated insights based on recent analyses.
The Framework of CORSIA
CORSIA operates on a phased timeline made up of three main stages:
- Pilot Phase (2021–2023): Voluntary participation by countries and allowing airlines to ‘opt-in’.
- First Phase (2024–2026): Continued voluntary participation by countries, however once a country commits to participate, compliance becomes mandatory for the aircraft operators under that country’s jurisdiction.
- Second Phase (2027–2035): Mandatory participation for all countries, except for those classified as least developed countries, small island developing states, and landlocked developing countries.
Under CORSIA, airlines are required to monitor, report, and verify their CO₂ emissions annually. If emissions exceed the 2019 baseline, airlines must purchase carbon offsets from approved projects to compensate for the difference. Approved carbon credits must meet ICAO’s eligibility criteria to ensure environmental integrity.
CORSIA is a market-based mechanism, and its success depends on robust participation, effective project development for carbon credit generation, and global political support.
Global Adoption and Implementation Challenges
Despite its ambitious goals, CORSIA’s adoption has been slow and uneven. While some countries have moved forward with transposing CORSIA requirements into national legislation, the lack of coordinated global action threatens the scheme’s effectiveness.
Key Regions’ Status
- United States: The world’s largest aviation market has not yet transposed CORSIA into national legislation. The Trump administration’s stance on climate policies created significant uncertainty, and there is little indication that progress will be made during Donald Trump’s second term (2025–2029). Without U.S. participation, the credibility and global reach of CORSIA could be significantly undermined.
- European Union: The EU has historically been proactive in addressing intra-Union aviation emissions through its Emissions Trading Scheme (ETS). However, the EU not integrated extra-Union flights into its regulatory framework. These are covered by CORSIA. If CORSIA fails to deliver the expected emission reductions, the EU may extend the scope of its ETS to cover international flights departing from or arriving in EU territory.
- Other Nations: Countries like Canada, Japan, the UK, and Brazil have adopted legal frameworks supporting CORSIA, including penalties for non-compliance. These nations serve as examples of proactive engagement, but their efforts alone cannot sustain the global aviation decarbonization effort.
Political Headwinds
Political uncertainties have cast a shadow over CORSIA. The re-election of Donald Trump in 2024, coupled with slow rulemaking in other regions, has created doubts about the program’s future. Market participants are concerned about whether major emitters, such as China, will fully engage with CORSIA if the U.S. continues to abstain.
Market Dynamics and Carbon Credit Supply
The market for CORSIA-eligible carbon credits has struggled to gain momentum. A combination of bureaucratic delays, limited project availability, and opaque price discovery mechanisms has hindered the market’s growth.
Supply Constraints
As of now, only two programs — Guyana’s ArtTrees REDD+ program and Kenya-based Koko Networks—have generated CORSIA-eligible credits at scale. This supply, however, falls far short of the estimated 100–150 million offsets needed by airlines during the first phase (2024–2026). The deadline for purchasing and surrendering these offsets is January 31, 2028. Bureaucratic processes, such as obtaining authorization letters from national authorities, continue to delay the issuance of credits, further exacerbating supply shortages.
Price Volatility
Limited supply and lack of liquidity have kept prices for CORSIA-eligible credits elevated. The absence of a robust trading ecosystem has made price discovery challenging, deterring airlines from making large-scale purchases. While auctions and futures instruments have been introduced, these mechanisms have yet to gain significant traction.
Recent Developments and Insights
Increased Airline Participation
Despite market challenges, there is genuine interest among airlines to engage with CORSIA. A recent auction organized by the International Air Transport Association (IATA) saw participation from 15 airlines, demonstrating a willingness to procure offsets even in a nascent market. However, airlines remain cautious about committing to large volumes due to uncertainties surrounding supply and political support.
New Standards and Initiatives
Recent decisions by ICAO to accept new standards into the CORSIA program signal progress. For example, the Gold Standard (GS) and Verra are actively consulting on Corsia requirements and working to approve new carbon credit projects. These developments could pave the way for increased supply and market liquidity.
Potential EU Action
The EU has warned of integrating international flights into its ETS if CORSIA fails to make a meaningful impact on emissions. This potential move could escalate tensions between the EU and the U.S., possibly leading to retaliatory trade measures. Such conflicts could destabilize global aviation decarbonization efforts and further undermine CORSIA.
Conclusion
CORSIA represents a crucial opportunity for the aviation industry to align with global climate goals. However, its success depends on overcoming significant challenges, including political uncertainties, supply constraints, and market inefficiencies.
The re-election of Donald Trump has introduced additional uncertainty, casting doubt on U.S. participation and potentially influencing other nations’ engagement. Meanwhile, the limited supply of eligible carbon credits and elevated prices continue to hinder market growth.
To sustain CORSIA’s credibility and effectiveness, it is imperative for governments, industry stakeholders, and project developers to collaborate. Swift action is needed to streamline bureaucratic processes, expand the supply of carbon credits, and ensure robust participation from all major aviation markets. Without coordinated global efforts, CORSIA risks becoming an ineffective tool in the fight against aviation emissions, leaving the sector vulnerable to alternative—and potentially more punitive—regulatory measures.