top of page
  • Writer's pictureThomas McMahon

Crunch time for CORSIA

Updated: Sep 22, 2022

When the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) releases its anticipated update in the coming weeks, it will be closely scrutinized not only by airlines and the aviation industry, but by corporates and carbon trading markets worldwide.

How will the scheme adapt to the unique circumstances of the global pandemic? How far will its new rules push mandatory versus voluntary carbon reduction measures? What new timelines will apply?

This last question is of particular interest to airlines. Whereas 2019 was a bumper year for flying, with the whole industry going at full speed and new routes springing up, 2020 was the opposite: a virtual shut-down. Therefore, if 2020 was used as the baseline for emissions then airlines would have been hammered, since they will clearly emit multiple times the amount of 2020 carbon in future.

So only 2019 was used as the baseline, to soften the future financial impact and give airlines a higher baseline from which to calculate their carbon liabilities. More recently, airlines recovered substantially in 2021 and through into 2022, although on average they’re still not as busy as in 2019. CORSIA is likely to remind them that, once they reach 101 per cent of their 2019 activity, they’ll need to start hedging their carbon emissions.

Oversupply reversed

Whereas in the early days of CORSIA, following its launch in 2016, the airlines had the market to themselves, carbon credits are now far more fiercely in demand, as listed companies around the world seek to comply with net carbon zero regulations and commitments. In 2019, airline financing experts predicted that the market would be oversupplied with carbon credits, with 140 million tonnes of overhang. That’s now completely reversed.

This demand is a reflection of CORSIA’s credibility, through creating products in which people want to invest. What will be interesting is how CORSIA responds, potentially including newer vintages of products and widening its remit further. As a major contributor to global carbon emissions, aviation as a sector needs to supply new products, new issuances; it needs to lead the market.

ICAO’s most recent predictions for the cost of CORSIA-eligible emissions units from now to 2026 vary between a low range of $1.20 to $1.90, a mid-range of $3.10 to $4.90 and a dramatically higher range of $21 to $32. Presuming that this pressure of demand continues, we expect the cost of units will track closer to the higher estimate.

From PR to treasury

What I anticipate happening is that, from 2023 onwards, carbon trading will move from a PR responsibility - where companies take part in order to satisfy reputational issues and to comply with their ESG principles - to a treasury and accounting responsibility, as CORSIA and other schemes evolve from voluntary to mandatory provisions.

It will be interesting to see whether CORSIA revises its schedules for its phased implementation of mandatory action, in view of the pandemic, alongside the sharp rises in fuel costs following Russia’s invasion of Ukraine. The pilot phase is meant to end in 2023, followed by a voluntary first phase from 2024-2026 and a second, more rigorous and compulsory phase from 2027-2035. The global economic environment has already dampened some companies’ willingness to fulfil their carbon commitments.

Carbon as a line item

For the airlines, charging an extra $4 on a passenger ticket for a carbon credit should become a minor line item. It really shouldn’t be hard for them to do, when they pay tens or even hundreds of dollars per ticket on fuel duties. The reality is that, if they don’t do it, they’ll be exposing themselves to additional risk. They need to treat carbon credits just as they treat food, fuel, tyres or any other running expense.

If you look at companies like GE or Boeing, they spend massive resources seeking to make their aircraft 1 per cent more efficient. But then, if their flying operations increase by 5 per cent, they’re naked by 4 per cent in carbon terms. That’s why they need to hedge, through buying credits.

At ACX, we offer transparent, efficient carbon pricing and fees, where there’s a clear auditing system and fees of 80 basis points instead of 150 basis points. We’re taking the opacity out of carbon trading and offsetting, enabling airlines and other businesses to fulfil their carbon reduction commitments.

No get out of jail cards

This professionalization is something CORSIA helped to pioneer: when the International Civil Aviation Organization (ICAO) announced the scheme, they laid out the parameters and these have gradually been accepted by other markets. Although so much has changed over the past 24 months, CORSIA was the foundation. Now, as listed companies begin to comply with their commitments, CORSIA needs to take the lead once again. Presuming the published schedule remains intact, after 2024, there should be no more ‘get out of jail’ cards.

In the shipping sector, for example, there’s no equivalent of CORSIA so far. I think the International Maritime Organization will accept their framework, along with other industries and nations, as they figure out what they stand to gain or lose.

Although we at ACX concentrate on keeping costs down for carbon traders, the underlying ethos is that carbon should be expensive: the idea is to make people pay attention and change their behaviour. Once businesses see that they can buy and sell carbon credits directly through ACX, they get a lot more transparency in the transaction. They’re no longer paying onerous fees to brokers for things they don’t recognize.

Overall, we believe that CORSIA set a good standard for carbon reduction and deserves kudos for surviving through the past six years of challenges. We’d like to see it continue to evolve and broaden its remit, as the threats from climate change grow ever clearer and more urgent.

Written with the help of Momo Media



The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) was founded in 2016 as the first global market-based measure to address CO2 emissions, developed in consultation with governments, industry and other organizations. It seeks to use offsetting programs to stabilize civil aviation net CO2 emissions at 2019 levels, from 2021. It describes itself as a ‘short-to-medium term’ strategy, to reduce carbon emissions until sustainable aviation fuel and electric and hydrogen-powered aviation becomes widespread. For more information visit

About AirCarbon Exchange

AirCarbon Exchange ("ACX") is a global exchange revolutionizing the voluntary carbon market. The Exchange’s client base comprises corporate entities, financial traders, carbon project developers and other industry stakeholders. ACX provides its participants with an efficient and transparent trading platform which is easy to use, frictionless and with the lowest transaction fees available on the market. Its underlying distributed ledger technology will allow the carbon market to scale efficiently to meet global ambitions of Net Zero.

ACX was recognized as the Best Carbon Exchange globally in Environmental Finance's prestigious Voluntary Carbon Market Rankings 2021 - the largest and most closely watched survey of the world's Voluntary Carbon Market. ACX was also named as the ‘Best Solution in Energy Trading’ by Wired UK and Publicis Sapient at their Global EnergyTech Awards, which spotlighted the companies that are ‘Winning the Race to Reinvent Energy’. For more information visit

bottom of page