As airlines prepare for the first voluntary phase of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), many are facing growing confusion over the carbon credits they can purchase to meet their emissions obligations. Trafigura Group, a global leader in carbon trading, recently highlighted concerns about the lack of clarity surrounding CORSIA-eligible credits. With airlines from 130 countries joining CORSIA, representing over 90% of international airline emissions, the pressure to meet carbon offset requirements is building.
While this situation presents challenges, it also underscores the importance of early preparation, clear regulatory frameworks, and expert guidance. At VURDHAAN, we actively assist aviation industry stakeholders in navigating the complexities of CORSIA, ensuring compliance with evolving regulations while helping companies build sustainable emissions reduction strategies.
CORSIA: The Need for Clearer Guidelines
The CORSIA initiative, launched by the International Civil Aviation Organization (ICAO), is a key part of the aviation sector’s strategy to address its carbon emissions. From 2024 to 2026, airlines are voluntarily participating in the scheme, which requires them to monitor and report their emissions while purchasing carbon credits to offset any growth in emissions beyond 2019 levels.
However, according to Hannah Hauman, global head of carbon trading at Trafigura, airlines are encountering a significant challenge: the supply side of the carbon market remains unclear. Despite active discussions and test trades, the lack of approved CORSIA-eligible credits from major carbon registries, such as Verra and Gold Standard, is causing confusion and concern within the industry. Hauman noted that “the demand clock has already begun ticking,” but airlines are still unsure how to fulfill their obligations under the current market conditions.
This uncertainty is compounded by the approaching 2027 deadline, when CORSIA’s requirements will shift from voluntary to mandatory compliance. Airlines face heightened regulatory risks if they are unable to secure eligible credits in time.
Preparing for the Transition: Early Action is Key
Despite these challenges, some industry players are already taking proactive steps to prepare for CORSIA. Michael Evans, group sustainability insights manager at International Airlines Group, emphasized the importance of early preparation during a recent panel discussion. “We are trying to prepare for CORSIA as early as we possibly can,” Evans said, underscoring the importance of acting ahead of regulatory deadlines.
This early preparation involves not only securing carbon credits but also understanding how CORSIA interacts with existing carbon markets, particularly in Europe. The European Union Emissions Trading System (EU ETS) adds another layer of complexity to the regulatory landscape, requiring airlines to meet different carbon offset requirements depending on their routes and markets. For many, this creates uncertainty and a potential regulatory bottleneck.
At VURDHAAN, we work closely with aviation clients to ensure they are not caught off-guard by these evolving requirements. Our expertise in both CORSIA and regional carbon markets, such as the EU ETS and UK ETS, enables us to guide airlines through the intricacies of offsetting emissions and achieving compliance. By staying ahead of regulatory changes and adopting best practices for emissions monitoring and reporting, airlines can mitigate risks and strengthen their sustainability strategies.
Navigating the Carbon Credit Market: Supply and Demand Challenges
One of the core concerns voiced by industry experts is the potential for a supply crunch in the carbon credit market. As the demand for CORSIA-eligible credits increases, airlines may face challenges securing the necessary offsets to meet their obligations. The fact that ICAO has yet to fully approve credits from major global registries adds to this uncertainty.
The aviation sector is one of the hardest industries to decarbonize, and while SAF (Sustainable Aviation Fuel) is expected to play a significant role in reducing emissions, it is not yet widely available at the scale required to make an immediate impact. Therefore, carbon credits remain a critical tool for airlines to meet their emissions targets in the short to medium term.
The current market conditions highlight the importance of expert guidance in navigating carbon credit procurement. At VURDHAAN, we help airlines identify reputable carbon credit sources and ensure that they are aligned with CORSIA’s evolving requirements. Our team assists in monitoring market trends, negotiating transactions, and securing the necessary credits to fulfill both voluntary and mandatory offset obligations.
The Road Ahead: Balancing Compliance and Sustainability
While the path to full CORSIA implementation may seem uncertain, the aviation industry has an opportunity to turn these challenges into opportunities for innovation and leadership. By engaging with the carbon market early, airlines can position themselves as sustainability leaders, demonstrating their commitment to reducing emissions and achieving long-term environmental goals.
However, the importance of clarity cannot be overstated. Airlines, carbon traders, and regulatory bodies must continue to collaborate to ensure that CORSIA’s framework is transparent and that the market is prepared to meet growing demand. The success of CORSIA will rely on effective regulatory oversight, the approval of high-quality carbon credits, and the commitment of airlines to integrate sustainability into their core operations.
At VURDHAAN, we remain at the forefront of this shift, offering strategic support to airlines as they navigate CORSIA and other global carbon offsetting schemes. Our comprehensive approach helps clients align with sustainability targets, ensuring compliance while driving meaningful environmental impact.
Conclusion: Charting a Clear Path Forward
The confusion surrounding CORSIA underscores the need for clarity in carbon markets and the importance of early preparation for airlines. While challenges remain, the aviation industry is steadily progressing toward a more sustainable future. By taking proactive steps and securing expert guidance, airlines can successfully navigate the complexities of CORSIA, mitigate regulatory risks, and achieve their emissions reduction goals.
At VURDHAAN, we are dedicated to helping airlines thrive in this new regulatory landscape. By leveraging our expertise in emissions compliance and sustainability strategy, we empower clients to not only meet but exceed their environmental targets, creating a more sustainable aviation industry for generations to come.