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CORSIA: Impacts on the VCM and demand dynamics

  • Isobel Sizer
    Policy Analyst
  • Joel Gould
    Senior Manager, Markets & Policy
  • Lily Ginsberg-Keig
    Policy Manager

Here are some key takeaways

  • 126 countries will voluntarily participate in CORSIA's first phase, covering roughly 80% of annual emissions from the aviation sector.¹

  • The availability of first phase-eligible credits is currently limited; only two standards bodies have been approved and credits will require a letter of authorisation from the project’s host country.

  • BeZero Carbon Ratings show variation in ratings for projects eligible under CORSIA’s pilot phase.

  • CORSIA will provide an injection of new demand for carbon credits, in the order of 60 - 160 million credits from the first phase, and this is likely to result in a significant price premium for eligible credits.


Tackling emissions from the aviation sector 

The aviation sector accounted for 1.1% of global carbon dioxide emissions in 2022, roughly equivalent to the annual emissions of the United Kingdom.² A notoriously difficult sector to abate because of the lack of alternative fuels, the most significant decline in international aviation emissions occurred when the majority of planes were grounded due to the global lockdown. While aeroplane operators are optimistic that the scaling of sustainable aviation fuels and technological advancements will help to reduce emissions, this is a long-term goal. In the short to medium term, these emissions will need to be offset. This is why the International Civil Aviation Organisation (ICAO) created The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a systematic effort to measure, report, and verify (MRV) emissions from the aviation sector in each of its member states.

The commercial aviation sector has historically been one of the most significant purchasers of carbon credits on the VCM.³ However, recent media criticism of the market has driven many airlines to reduce their purchasing, and some to exit the market altogether. As we move into CORSIA's first phase, with 126 countries signed up to comply with the scheme, we can expect a significant increase in demand for carbon credits from airlines, and a further increase from the start of the second phase in 2027.

So what is CORSIA?

The first international compliance market by industry sector

CORSIA is part of the basket of measures that the aviation industry is implementing to reduce emissions. It is a Paris Agreement-aligned initiative and aims to provide the infrastructure for airlines to make actionable climate pledges to decarbonise the aviation sector.

Timeline of CORSIA

Figure 1. Timeline of CORSIA

The CORSIA scheme is set to run in three phases until the end of 2035. The baseline was set at 2019 aviation emission levels, to limit the financial cost of a drastically lower emissions target based on 2020 lockdown emissions, which would have been compounded by the existing pressures from the COVID-impacted economy. The pilot phase (2021-2023) has concluded, with final emissions calculations due to be released by November 2024. Operators who have offsetting obligations under the pilot phase are required to retire CORSIA Eligible Emissions Units by the end of January 2025. CORSIA’s first phase is now underway, with even more states voluntarily participating. The emissions baseline for the first phase is set at 85% of 2019 levels. Operators will need to offset any emissions over this baseline at the end of the three year period.

126 countries are participating in the first phase, despite available exemptions

Map depicting the status of participation in CORSIA by country

Figure 2. Map depicting the status of participation in CORSIA by country

During the pilot phase, CORSIA was dependent on the willingness of states to participate, beginning with 88 participating states, which increased to 115 by the end of the period. 126 states have announced their participation from the start of the first phase. In 2027, the scheme will be mandatory for all ICAO members,  including China, India, and Russia, and at that stage it will cover over 90% of global emissions from the sector. Exceptions will be made for states whose annual share of revenue tonne kilometres (RTK) is less than 0.5% based on reporting in 2018.Nations categorised as least developed countries (LDCs) and others of similar socioeconomic status are also exempt.

Monitoring, reporting, and verification for the ‘route-based’ approach began in 2019

The route-based approach is designed to minimise market distortions between operators. If a route is between two participating states, it is covered by the scheme. If one or both states are not participating, the emissions must still be reported, but are not required to be offset.

The scheme required all airline operators to begin measuring their emissions from 1 January 2019. Each state authority is responsible for collating reports from airline operators that are registered within their jurisdiction and reporting the aggregated emissions to ICAO. States provide information on emissions between state pairs and on individual aeroplane operators within their jurisdiction.

Map showing requirements for aeroplane operators

Figure 3. Example of different requirements for aeroplane operators based on country participation status

How will CORSIA impact carbon markets?

CORSIA may create a new benchmark, but BeZero Carbon Ratings show a variation in project quality

Market stakeholders are increasingly referring to CORSIA eligibility as a proxy for credit quality. Standards bodies apply for eligibility under the ‘CORSIA Emissions Unit Eligibility Criteria’, determined by the ICAO. The ICAO Technical Advisory Body then assesses those programmes and makes recommendations to the ICAO Council on which ones should be confirmed as eligible. This assessment, while an important step, is not a guarantee of quality at the project level.

We explored this relationship last year in our report ‘Quality isn’t binary in the voluntary carbon market’. BeZero Carbon maintains that ratings are crucial to understanding disparities in quality and associated risk at the project level. Analysis of our ratings for projects that are eligible under CORSIA’s pilot phase clearly shows that quality is not guaranteed.

Chart showing ratings distribution for CORSIA pilot phase-eligible projects

Figure 4. Distribution of BeZero Carbon Ratings for CORSIA pilot phase-eligible projects

Lack of progress on Article 6 may impact the effectiveness of CORSIA

In December 2023, the Technical Advisory Body released clarifications as to how they interpret the eligibility criteria regarding ‘double counting’ of credits; we expect further guidance on this from the ICAO Council this year. This publication included recommendations for the application of corresponding adjustments (CAs) to CORSIA-eligible credits. Corresponding adjustments are a carbon accounting method designed to avoid double counting of mitigation outcomes, conceived through the mechanisms introduced by Article 6 of the Paris Agreement. However, the lack of progress towards rules of operation for corresponding adjustments was a defining feature of carbon market negotiations at COP28 and could impact CORSIA too.

For a corresponding adjustment to be applied, project developers must obtain a letter of authorisation (LoA) from the project’s host country. This LoA indicates that the host country is willing to adjust their greenhouse gas inventory to reflect the transfer of the credit sold. However, due to the failure to clarify rules on CAs, approaches are currently fragmented. Differences between standards bodies and host countries in their application of CAs could impact the scalability of eligible credits. 

In terms of Article 6 credits, while efforts under Article 6.2 are underway, the amount of credits needed to achieve Nationally Determined Contribution (NDC) pledges and CORSIA commitments will require the operationalisation and scaling of the centralised mechanism proposed under Article 6.4. Progress here is paramount to successful and meaningful climate action, although this is expected to be delayed until COP30.

CORSIA demonstrates integration between voluntary and compliance markets

The eligibility of credits under CORSIA is a clear example of the integration of voluntary and compliance carbon markets. Increasingly, we are witnessing compliance schemes learn from the VCM, adopting its standards and initiatives. For example, the ICAO is approving VCM standards bodies to supply eligible credits for CORSIA. Currently only two registries are approved under the first phase: American Carbon Registry and Architecture for REDD+ Transactions (ART). A number of registries are conditionally approved and are awaiting final approval upon a few adjustments, including Carbon Action Reserve, Gold Standard, and Verra. 

In addition, the Integrity Council for the Voluntary Carbon Market (ICVCM) will fast-track CORSIA-eligible methodologies for Core Carbon Principle (CCP) labels. The CCPs aim to assess carbon crediting programmes (standards bodies) and categories (methodologies) to improve integrity and quality in the market. The VCM is awaiting the introduction of the first CCP labels, with hope for the first labels to be released early this year. CCP labelling of CORSIA-eligible credits has the potential to expand the demand base beyond aeroplane operators. Market participants wishing to minimise reputational risk may seek to purchase such credits owing to CCP labels being an additional indicator of integrity. However, the CCPs are a binary measure of quality at the programme and methodology level. While BeZero Carbon welcomes industry initiatives that aim to increase the environmental integrity of carbon credits, project-level assessment is still key to ascertain the carbon efficacy of the project. 

Will CORSIA significantly impact the demand for carbon credits?

CORSIA’s first and second phases will provide an injection of new demand for carbon credits

Chart showing forecast demand range for carbon credits  2024 - 2035

Figure 5. Forecast demand range for carbon credits from CORSIA 2024 - 2035. Source: IATA as referenced by CFP Energy

Figure 5 shows the potential demand for carbon credits from CORSIA's first and second phase, based on International Air Transport Association (IATA) forecasts. Total demand during the first phase is expected to be in the order of 60 - 160 million credits, and in the order of 1 - 2 billion credits during the second phase. These forecast ranges are wide since there is considerable uncertainty surrounding a number of factors, including the proportion of required emissions reductions that will be met through technological developments and the use of sustainable aviation fuel. When compared with the total scale of demand in the VCM at present (retirements have been around 200 million per annum in recent years), it is clear that CORSIA will provide a sizable demand boost to the VCM, even at the lower bound of the forecast range.

This will likely create a significant price premium for eligible credits

Chart showing upper forecast demand estimate vs total available credits

Figure 6. Upper forecast estimate of demand for carbon credits from CORSIA's first phase compared with the total available (non-retired/cancelled) credits of 2021 vintage or newer from major registries, as of 24th January 2024. Registries covered here are: American Carbon Registry, Cercarbono, Climate Action Reserve, Gold Standard, and Puro.Earth.

Chart showing transaction volume-weighted mean price for credits

Figure 7. Transaction volume-weighted mean price for credits transacted on Xpansiv’s CBL exchange in 2023, by BeZero Carbon sector group. Mean prices shown separately for all credits and credits of 2021 vintage or newer.

In considering how this injection of new demand will impact prices, it is important to recognise the scope of credits that will be eligible under CORSIA’s first and second phases. It is expected that eligibility will eventually extend to cover credits issued from major VCM registries, excluding Clean Development Mechanism (CDM) credits, of vintage 2021 or newer. The exclusion of CDM credits is largely due to the mechanism ceasing to operate as elements of it are set to be merged into the new Article 6.4 mechanism, although how delays in the operation of Article 6.4 will impact this transition remains to be seen.

Considering the market as of January 2024, the vintage restriction removes more than 70% of available credits from the scope of CORSIA, leaving around 240 million credits potentially available.⁸ As shown by Figure 6, this is larger than the expected demand under the first phase, and supply will be boosted by further credits issued over the coming years. 

Despite this, expectations remain that CORSIA-eligible credits will increasingly trade at a premium, not least because newer vintages already face higher demand and consequently command higher prices, most notably in the Nature-Based Solutions sector group (see Figure 7). At present, only a small proportion of credits are tagged with a ‘corresponding adjustment’ label, and if this does not grow significantly, expected demand may massively outstrip supply, leading price premiums to skyrocket. 

Concluding remarks

The CORSIA mechanism is essential to decarbonising an incredibly hard-to-abate sector. While technological improvements and the scaling of sustainable aviation fuels are critical to the future of the aviation sector, offsetting can help to meet climate goals in the short term. The expected impact on demand will result from approved standards bodies, conventionally associated with the VCM, but will require a letter of authorisation and a corresponding adjustment. Therefore, the effectiveness of the CORSIA mechanism is also linked to the development of the rules of operation for Article 6, but the extent of the impact of delays remains unclear. Analysis shows that a price premium can be expected for eligible credits, particularly as those are also likely to bear the first CCP labels. We will continue to monitor announcements from the ICAO as more standards bodies are approved to provide credits for CORSIA’s first phase.


¹ This estimation is based on the ICAO 2018 RTK Rankings by state, which are used to determine requirements to participate in CORSIA, and the list of the 126 participating countries, ‘State Pairs’, as of 1 January 2024.

² European Commission. 2023. EDGAR - Emissions Database for Global Atmospheric Research. Available online:

³ See for example:

See for example:

RTK is a metric used in aviation to reflect when 1 tonne of revenue load is carried 1 km, allowing airlines to compare their fuel use.

Small island developing states (SIDS), least developed countries (LDCs), land-locked developing countries (LLDCs). A full list of states ranked by their emissions share and exemption status can be found here: 

ICAO Technical Advisory Body. 2023. p.20. Available online:

Available’ here refers to issued credits that have not been retired or cancelled.