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Decoding CORSIA Phase 1: What it means for sustainable aviation and the future of carbon credits

January 3, 2024
Decoding CORSIA Phase 1

This blog was updated on 11th January 2024 with more specific language on CORSIA eligible credits for the first phase.

As we enter the new year, the aviation industry is about to witness a pivotal moment with the implementation of the first phase of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) on January 1, 2024. This change will have many ripple effects for all voluntary carbon market (VCM) participants.

Why is CORSIA Phase 1 important for the VCM?

  • 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 airline operators with annual 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 their emissions from 2019. The pilot phase ran from 2021-2023, and 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 flights 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 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 aviation fuel, primarily biofuels, is one of the most discussed levers in air transport’s net zero solution portfolio. 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 that there is significant risk to delaying 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.

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 in the next two months.

Further 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 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 adhere to compliance deadlines by 31 January 2028, so it’s critical airlines secure their carbon credits to comply 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

As CORSIA Phase 1 marks a pivotal moment in 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, supporting you with every step from discovery to due diligence to monitoring.
  • We can also help define your climate & CORSIA compliance strategy. Our policy experts can help you get a realistic picture of the various possible scenarios following March's 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 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.  
Interested in learning more? Reach out to our team.
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About the author
Policy Associate

Malavika is a Policy Associate at Sylvera. She has a background in law, and has experience working in climate policy and carbon markets. As part of the policy team at Sylvera, she focuses on the Jurisdictional REDD+ landscape and emerging carbon market regulation. Her role also follows the CORSIA regime and its implications for carbon market participants within and beyond the international aviation sector.