As global air travel rebounds and regulatory frameworks tighten, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is entering a transformative decade. This international initiative, spearheaded by the International Civil Aviation Organization (ICAO), is more than a compliance mechanism—it is shaping the economic and operational strategies of airlines worldwide.
Shifting Market Dynamics: Demand Rebounds with a Vengeance
Between 2024 and 2035, demand for CORSIA-eligible carbon credits is expected to grow dramatically. Allied Offsets estimates that airlines will need between 101 and 148 million tonnes (MtCO₂e) during Phase I (2024–2026), rising to as much as 1,299 MtCO₂e in Phase II (2027–2035).
This growth is not just a reflection of more flights—it signals a systemic shift. With Phase II mandating broader participation among ICAO member states, airlines must begin long-term planning today to avoid future credit shortages.
Supply Constraints: A Tightening Market for High-Quality Credits
Despite rising demand, the projected supply of eligible credits is limited. Stricter quality filters—such as permanence, co-benefits, and additionality—reduce the usable pool. Only about 543 MtCO₂e of credits are expected to be available by 2027, and most of this supply is concentrated in projects based in India, China, and Brazil.
The implications are clear: airlines that delay procurement could face both scarcity and premium pricing.
The Price Outlook: Signals from a Volatile Future
Forecasts from Allied Offsets and MSCI suggest a range of pricing scenarios. Even in conservative projections, prices trend upwards, rising from $14–$18 per tonne to over $90 by 2035 in high-demand cases. This could profoundly influence procurement strategies.
What is less obvious is the strategic opportunity embedded in these numbers: higher prices could accelerate investment in sustainable aviation fuels (SAF) and insetting initiatives, which not only offer compliance benefits but also align better with long-term decarbonization pathways.
Geography Matters: Regional Trends and Emerging Hotspots
Current supply is heavily concentrated in a few countries. This introduces geopolitical risk. Any regulatory shifts—such as India potentially limiting credit exports—could constrict global supply overnight.
Conversely, this opens up new opportunities for regions like Africa, Southeast Asia, and Latin America. By fostering high-integrity, nature-based carbon projects, these areas can become future leaders in the voluntary carbon market.
Strategic Takeaways for Airlines
Airlines today are navigating a complex mix of regulatory compliance, reputational risk, and long-term sustainability targets. CORSIA credits, while critical, are just one piece of this puzzle. Strategic actions could include:
- Diversifying carbon portfolios to include removals like reforestation and direct air capture
- Investing in SAF to reduce dependency on offsets
- Communicating transparently about the quality and impact of purchased credits
The Role of Corporate Buyers in Shaping the Market
Large-volume offtake agreements—such as Microsoft’s 18 MtCO₂e deal—are setting the tone for future market expectations. These actions are pushing the entire market toward more durable, high-integrity carbon removals.
Airlines, through their scale and visibility, are uniquely positioned to lead this transformation.
Conclusion: A Decade of Decisions
CORSIA is not merely about meeting today’s requirements. It is a gateway to the next phase of climate leadership in aviation. As demand rises and supply tightens, proactive engagement with carbon markets, technology investments, and sustainable fuels will define which airlines thrive in a decarbonizing economy.
The next ten years will not just shape compliance strategies—they will define the credibility of airline sustainability commitments for decades to come.