20 Apr
The global aviation industry is in the middle of a profound regulatory shift, and at the center of it is CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation. As the first global market-based measure applied to a single industry sector, CORSIA represents a new era of accountability for aviation emissions.
Established by the International Civil Aviation Organization (ICAO), CORSIA’s central objective is carbon-neutral growth. In practical terms, this means that as international aviation continues to expand, any carbon dioxide emissions that exceed a defined baseline, currently set at 85 percent of 2019 levels, must be mitigated.
To meet these obligations, airlines rely on two primary pathways. The first is CORSIA Eligible Fuels (CEF), which focuses on reducing emissions at the source through the adoption of sustainable aviation fuel. The second is CORSIA Eligible Emissions Units (EEUs), which involve purchasing high-quality carbon credits to offset any remaining emissions gap. Together, these two pillars form the backbone of compliance.
However, not all carbon credits qualify under CORSIA. To be used, a credit must meet the threshold of an Eligible Emissions Unit (EEU). These units are rigorously assessed by the Technical Advisory Body under ICAO, ensuring that only credits with strong environmental integrity are approved. This has led to a tightly controlled supply landscape, where only a limited number of carbon standards are authorized to issue credits for Phase 1. As of 2026, programs such as Gold Standard, Architecture for REDD+ Transactions (ART), and the American Carbon Registry (ACR) are among those permitted to supply CORSIA-eligible credits.
One of the most critical technical requirements shaping the market today is the corresponding adjustment requirement. Under Article 6 of the Paris Agreement, host countries must issue a Letter of Authorization (LOA) to prevent double-counting. This means that if an airline uses a carbon credit generated in a country such as Kenya, that country must adjust its national carbon accounting to ensure the same emissions reduction is not counted twice. Without this adjustment, the credit cannot be considered valid for CORSIA compliance.
Eligibility is also shaped by strict vintage rules. For Phase 1, credits must generally originate from projects whose first crediting period began after January 1, 2016, and must correspond to emissions reductions achieved between January 1, 2021, and December 31, 2026. These constraints further narrow the pool of available credits.
In 2026, the CORSIA market is tightening significantly. While more than 130 states are now participating, the supply of Phase 1-compliant credits remains limited. A major reason for this is the slow pace at which countries are establishing Article 6 frameworks and issuing Letters of Authorization, creating a bottleneck in the system.
At the same time, regulatory developments in key markets are adding new layers of complexity. A recent draft proposal from the European Commission has introduced uncertainty by suggesting stricter eligibility criteria for airlines operating within the European Union. This could potentially exclude certain forest conservation projects and place limits on specific clean cooking methodologies, reshaping demand for different types of credits.
Pricing dynamics are also evolving. New mechanisms such as conditional offtake agreements are emerging, allowing airlines to secure future credit supply that is expected to be formally tagged in registries by 2028. These instruments are becoming essential as companies seek to manage exposure to rising spot market prices in an increasingly constrained environment.
For project developers, the implications are clear. Environmental integrity is no longer optional. It is the defining currency of the carbon market. As ICAO evaluates new programs for the next compliance cycle, the focus is shifting toward transparency, methodological rigor, and credible corresponding adjustment pathways.
The window to position high-quality projects within this system is narrowing. Those who move early, align with evolving standards, and secure host country authorization will be best placed to capture value.
The time to act is now. The sky is no longer the limit. It is the baseline.
