“Over the years we’ve invested significantly in our field data team - focusing on producing trusted ratings. While this ensures the accuracy of our Ratings, it doesn’t allow the scale across the thousands of projects that buyers are considering.”
For more information on carbon credit procurement trends, read our "Key Takeaways for 2025" article. We share five, data-backed tips to improve your procurement strategy.
One more thing: Connect to Supply customers also get access to the rest of Sylvera's tools. That means you can easily see project ratings and evaluate an individual project's strengths, procure quality carbon credits, and even monitor project activity (particularly if you’ve invested at the pre-issuance stage.)
Book a free demo of Sylvera to see our platform's procurement and reporting features in action.
On January 1, 2024, the aviation industry began implementation of the first phase of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
This change has had ripple effects for all voluntary carbon market (VCM) participants. Some of these ripple effects include limited credit supply and new credit quality benchmarks.
In this article, we explain what CORSIA Phase 1 is, why it's important to the VCM, what compliance to this regulation looks like, details about CORSIA eligible fuels and credits, and more.
Why is CORSIA Phase 1 important for the VCM?
CORSIA Phase 1 is important to the voluntary carbon market (VCM) for two distinct reasons:
- CORSIA Phase 1 will have significant implications for the available credit supply, as many airlines and aircraft operators will be required to purchase credits from a limited approved selection.
- Market stakeholders have used credits eligible for CORSIA as a benchmark for quality. Notably, the Integrity Council for the VCM (ICVCM) has taken steps, such as fast-tracking CORSIA-eligible credits, to streamline processes and avoid unnecessary bureaucracy. This acknowledgment underscores the substantial groundwork laid by initiatives like CORSIA, enhancing the credibility of the scheme and amplifying attention and demand for CORSIA-approved credits.
Understanding CORSIA Phase 1
CORSIA, established by the UN's International Civil Aviation Organization (ICAO), is a market-based mechanism to address international aviation emissions.
All air transportation providers with annual greenhouse gas emissions over 10,000 tonnes of CO2 must monitor and report their emissions while purchasing carbon credits to offset them so they don't exceed emissions from 2019. The pilot phase ran from 2021-2023. Now, as we enter the first phase, from 2024-2026, the requirements become more stringent.
CORSIA Phase 1 holds substantial importance for the aviation industry. Like the pilot phase, Phase 1 is voluntary for states, meaning countries can elect to participate. However, for airlines, CORSIA Phase 1 compliance is mandatory for all international routes between those participating states. With 126 countries committed to participating in Phase 1, a significant portion of international flights will be subject to CORSIA compliance.
What does compliance to CORSIA Phase 1 look like?
CORSIA enforces carbon-neutral growth for the international aviation sector from 2021 onwards. Airlines seeking compliance have three options:
- Improving operational efficiency and fleet.
- Purchasing carbon credits that comply with CORSIA Eligible Emissions Units programmes criteria.
- Increasing use of sustainable aviation fuels (SAFs).
Aviation is a complex ecosystem influenced by diverse companies, international governance bodies, global governments, and, ultimately, consumer activities.
Guidance for net zero and carbon accounting in aviation can appear fragmented, but there are still fundamental pillars that are a north star for aviation's net zero path. Read here for more on airlines improving operational efficiency
Sustainable aviation fuel (SAF), which generally describes non-conventional jet fuel, primarily biofuels, is one of the most discussed levers in air transport's net zero solution portfolio. (For example, a non-petroleum-based renewable feedstocks can be used to produce SAF.)
The airline industry's trade association, International Air Transport Association (IATA), has set an industry-wide goal of net zero by 2050 and estimates that SAF will contribute around 65% of the emissions reductions needed for this.
SAF will be key to the industry's net zero journey, however in the short term, uncertainties around technology development and scalability of SAFs that predicate much of the sector's net zero modeling means there is significant risk to delayed action. For the vast majority of airlines and other aircraft operators who need to comply with CORSIA sooner rather than later, carbon credits are a more realistic, scalable, and affordable option to meet offsetting requirements.
Which carbon credits are CORSIA eligible?
In order to purchase carbon credits that can be used under CORSIA, the credits must come from CORSIA-approved standards. The approval process for carbon credit standards under CORSIA Phase 1 has been stringent. Only two standards, American Carbon Registry (ACR) and Architecture for REDD+ Transactions (ART), have received approval so far.
Registries are platforms linking projects that store or offset carbon with buyers acquiring carbon credits. These platforms track projects and issue credits, often adhering to specific standards and methodologies. To contribute to your CORSIA target, purchased carbon credits must come from a CORSIA-approved registry. Registries must apply in order to be approved, and those approved during the pilot phase need to apply again to be eligible under the first phase.
Under CORSIA Phase 1, there are currently only two approved registries. Out of these two registries, only one has available credits. Some registries have been conditionally approved which means the ICAO has requested the standard to apply some changes. The list of approved registries is expected to be updated in March 2024, but at the moment, only one-tenth of the previous supply is currently accessible.
The current uncertainties surrounding approved methodologies and market factors have hindered airlines from defining and implementing their Phase 1 CORSIA strategies. Encouragingly, increased clarity on methodologies is just around the corner, with further confirmations expected soon.
Supply clarity will likely start to drive compliance demand as leading airlines and speculators start initiating their CORSIA strategies. While the approved methodologies at present are somewhat limited, the final approved list could closely align with the pilot phase, with potential differences arising from adjustment requests by the International Civil Aviation Organisation (ICAO) as part of conditional approvals.
A notable difference from the pilot to the first phase can be inferred from the approval granted to American Carbon Registry. As displayed in the image above, ACR's approval for the pilot phase was subject to some methodological exclusions, particularly projects following its LULUCF methodologies in REDD+ countries. For the first phase, ACR has been approved without any methodological exclusions, thereby opening up the possibility that ACR's REDD+ projects (largely ARR, IFM and Wetland Restoration) can supply credits for CORSIA.
Even with more registries likely to gain approval, there is still a limited supply, creating challenges for airlines seeking CORSIA-eligible credits, especially as demand continues to rise.
Airlines must comply within the compliance period, which ends January 31, 2028. To do so, airlines must secure quality carbon credits as soon as possible, given the limited supply and anticipated cost escalation.
CORSIA's influence beyond airlines
Not only will the credit supply challenge airlines, it could lead to potential credit shortages throughout the VCM. In anticipation, the ICVCM is expected to fast track CORSIA-eligible credits to avoid unnecessary bureaucracy, acknowledging CORSIA's substantial groundwork laid to vet these credits. As the market is still burgeoning, such eligibility criteria will likely set the standard for similar benchmarks.
CORSIA criteria are anticipated to influence ICVCM assessments and will intensify the demand for these credits. Many corporations outside of aviation are now adopting CORSIA eligibility as a minimum threshold for their credit portfolios, which will further increase overall demand. Although the fast-track path reduces scrutiny on CORSIA-eligible credits by the ICVCM, it does not guarantee all CORSIA suppliers meet the ICVCM's criteria.
How Sylvera can help
CORSIA Phase 1 marked a pivotal moment in lower carbon aviation fuels, sustainable aviation practices, and carbon credit markets. Sylvera assists stakeholders in adapting to these changes.
Strategic actions taken today not only contribute to a more sustainable and responsible future but can also be substantially more cost-effective than waiting for tomorrow.
- Investing in high-quality carbon credits is crucial for the aviation industry, Sylvera can support the creation of a holistic climate action strategy. We can support your end-to-end journey with credits, offering strategic guidance for every step in the process, from Discovery to Monitoring.
- We can also help define your climate & CORSIA compliance strategy. Our technical advisory body can help you get a realistic picture of eligibility updates and future market developments so you can navigate the uncertainty and be ready to take action before prices rise.
- With our reliable and accurate data and insights, we can help navigate your concerns about the risks associated with carbon credits so you can make informed decisions and take "no regrets" climate change action. Our deep project-level due diligence through our carbon credit Ratings data helps ensure a comprehensive understanding of the carbon credit landscape, including the evaluation of quality within registries and project types. We also evaluate each project's host country to make sure its standards align with international carbon standards and commonly accepted sustainability criteria.
CORSIA aims to reduce carbon emissions in the aviation sector. Sylvera has the tools you need to comply with CORSIA standards. Book a demo of Sylvera today to learn more.
