The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is the first sector-wide climate-compliance mechanism to reach the demand side of the voluntary carbon market at scale. Its second phase, opening in 2027, converts what has been a voluntary pilot into a mandatory obligation for the great majority of international airlines. This briefing sets out who is obligated, how each carrier’s requirement is calculated, credible ranges for total volumes over the 2024–2035 horizon, and the portfolio-construction question the buy-side is beginning to face: how much of the obligation to satisfy through bulk-priced eligible units, and how much to allocate to higher-integrity, higher-story credits like community water and clean-cooking projects.

The analysis is intended for procurement teams at airlines, carbon-project developers pitching to airline offtake, and financial buyers structuring forward supply.

The three phases and who is inside them

CORSIA operates in three defined periods.

The Pilot Phase (2021–2023) ran on a voluntary basis with a limited number of participating states. It generated only a modest offsetting obligation because pandemic-year emissions collapsed the reference-baseline computation used at the time.

Phase 1 (2024–2026) remains voluntary but has widened materially. As of the 41st ICAO Assembly, volunteering states include the United States, the United Kingdom, all EU Member States, Norway, Switzerland, Japan, Singapore, the United Arab Emirates, Qatar, Australia, New Zealand, Canada, and most other OECD member states.^[1] Notably absent from the volunteering list: China, India, Brazil, and Russia. Airlines whose flag is a non-participating state face no CORSIA obligation on flights where at least one endpoint is in a non-participating state, though they are still captured when they operate flights between two participating states.

Phase 2 (2027–2035) is mandatory. All ICAO member states are captured except those that qualify as Least Developed Countries (LDCs), Small Island Developing States (SIDS), or Landlocked Developing Countries (LLDCs) whose individual share of international revenue tonne kilometres is below the exemption threshold.^[2] The great majority of internationally-operating airlines will be inside Phase 2 — including the carriers currently outside Phase 1 through their flag state’s non-participation: China Southern, China Eastern, Air China, Air India, IndiGo, LATAM, and others.

The transition from Phase 1 to Phase 2 approximately triples the population of obligated carriers and multiplies the volume of covered emissions.

How each airline calculates its obligation

Under Assembly Resolution A41-22, Appendix A, an operator’s annual offsetting requirement is calculated as its share of the sector-wide offsetting requirement, apportioned by an evolving weighted mix of two factors.^[3]

The sectoral growth factor (SGF) distributes the total sector obligation to individual operators in proportion to their share of covered emissions in the year of reporting. Under SGF alone, an airline that grew slower than the sector still contributes if the sector as a whole exceeded baseline.

The individual growth factor (IGF) distributes obligations to operators in proportion to how much each operator’s own emissions exceeded its own historical baseline. Under IGF alone, an airline that shrank while the sector grew has zero obligation, and an airline that grew fastest within a growing sector carries proportionally more.

The two factors mix over time on a schedule set by A41. Under the current schedule, the sector-only period runs through 2029, after which individual growth factor weights rise in defined steps until 2032. From 2032 onwards, the individual growth factor dominates. The precise annual weighting is specified in the CORSIA implementation package published by the ICAO Environment Branch.^[4]

The practical consequence for procurement: the earlier an operator locks in credit supply, the less exposed it is to its own growth outperforming the sector in the individual-factor period. Fast-growing carriers — typically Middle Eastern and some Asian long-haul specialists — face proportionally larger 2030s obligations than their share of current sector emissions would suggest.

Estimated market volumes

The two variables that dominate the CORSIA credit-demand calculation are the recovery trajectory of international aviation emissions relative to the 85%-of-2019 baseline, and the pace at which sustainable aviation fuels (SAFs) substitute for offsetting. A tonne of qualifying SAF, verified through the CORSIA lifecycle-assessment methodology, reduces the offsetting obligation by the emissions its combustion would otherwise have generated.^[5]

For Phase 1 (2024–2026), the credible range of total offsetting demand sits in the region of 100 to 200 million tonnes of CO₂ cumulative over the triennium. This estimate is bounded above by pre-COVID growth-trajectory extrapolation (which pushes closer to 250 Mt CO₂) and below by high SAF-substitution scenarios paired with slower-than-projected international traffic recovery. IATA’s own working figures, published in updates through 2024, have generally converged on the middle of this range.^[6]

For Phase 2 (2027–2035), the population of obligated carriers roughly triples and the coverage of international emissions widens materially. Credible cumulative demand estimates for the nine-year Phase 2 window span 1.5 to 3 billion tonnes CO₂. The upper end of this range assumes limited SAF penetration and continued strong traffic growth from India, China (post-2032 participation), and the Gulf carriers; the lower end reflects aggressive SAF deployment reducing offset requirements and slower demand growth.^[7]

To translate this into carbon-market context: the current voluntary carbon market retires roughly 200 million tonnes per year across all buyer types.^[8] CORSIA Phase 2 alone, at the mid-point of the credible range, implies annual offsetting demand of 200–300 Mt CO₂ from airlines alone from 2027 onwards — a demand shock comparable in magnitude to the entire pre-existing voluntary carbon market. Whether this shock is absorbed by supply, or triggers price spikes, depends principally on the pace at which CORSIA-eligible programmes are approved and issue credits.

Airline-level exposure — the top of the table

Individual airline obligations depend on emissions from international operations, not total emissions. Domestic aviation is out of CORSIA scope. This structurally advantages primarily-domestic carriers (Southwest Airlines, most Chinese domestic majors, LCC networks operating largely within a single country) and disadvantages primarily-international carriers.

The following are the international-network carriers with the largest expected Phase 2 obligations, ranked by indicative pre-COVID international CO₂ emissions:

1. Emirates — the largest international-network carrier by ASKs, effectively 100% international operations.
2. Ryanair — the largest intra-European operator, entirely international within the EU CORSIA framework.
3. United Airlines — extensive transatlantic and transpacific network.
4. Delta Air Lines — extensive international network, particularly transatlantic.
5. American Airlines — comparable international footprint to United and Delta.
6. Lufthansa Group — combined obligation across Lufthansa, SWISS, Austrian, and Brussels Airlines.
7. International Airlines Group (IAG) — British Airways, Iberia, Aer Lingus, Vueling, LEVEL.
8. Air France-KLM — combined obligation across the two carriers.
9. Qatar Airways — long-haul international specialist.
10. Singapore Airlines — long-haul international specialist.
11. Turkish Airlines — extensive international network from Istanbul hub.
12. Cathay Pacific — Hong Kong hub, principally international.
13. ANA and JAL — Japanese long-haul carriers.
14. Korean Air — international network.
15. Air Canada — extensive transatlantic and transpacific.

Airlines currently outside Phase 1 through non-participation of their flag state, but which will be inside Phase 2, include the three Chinese majors (Air China, China Eastern, China Southern), Air India, IndiGo, LATAM, and other significant Latin American and Central Asian carriers.

Individual obligation size depends not only on absolute emissions but on the growth-factor mix in each compliance year. As IGF weighting rises through the 2030s, carriers whose international operations grew faster than the sector average will carry proportionally larger burdens. This includes the Gulf trio, the Indian carriers, and any European or North American carrier that recovers its post-COVID international network faster than average.

Illustrative order of magnitude: a mid-sized international carrier with 15 Mt CO₂ of covered emissions in a compliance year, facing sector-wide baseline overshoot, might carry an annual Phase 2 obligation in the region of 500,000 to 1.2 million tonnes CO₂, depending on the SGF/IGF blend and its own growth rate. The three US majors and the two largest Gulf carriers are likely to sit above this range; smaller carriers below.

What airlines can buy — the CORSIA-eligible universe

Not every carbon credit is eligible for CORSIA compliance. To qualify, credits must be issued by a programme that has been assessed and approved by the ICAO Technical Advisory Body (TAB) against the CORSIA Emissions Unit Eligibility Criteria (EUC) — the framework governing additionality, permanence, quantification, and corresponding adjustments.^[9]

As of the most recent TAB decision cycles, programmes with credits assessed as eligible for CORSIA Phase 1 include the American Carbon Registry (ACR), Architecture for REDD+ Transactions (ART), the Climate Action Reserve (CAR), Verra’s Verified Carbon Standard, and the Gold Standard for the Global Goals — each with specific methodology, vintage, and geographic conditions attached to individual TAB decisions.^[10]

Phase 1 carries an additional integrity requirement beyond programme approval: for a credit to be usable in Phase 1, the host country of the underlying project must have committed to apply a “corresponding adjustment” to that credit under Article 6 of the Paris Agreement. This is a bilateral government-to-government commitment ensuring the credit is subtracted from the host country’s own Nationally Determined Contribution accounting. Not every project host country has made this commitment for every credit. The corresponding-adjustment gate has been the principal chokepoint on Phase 1 supply and has kept the price of qualifying credits high.

The universe of qualifying credits will expand into Phase 2 as more programmes complete TAB review and more host countries provide corresponding-adjustment letters of authorisation. Airlines currently negotiating Phase 2 procurement are structuring contracts contingent on qualifying-eligibility outcomes.

The supply gap

The gap between projected Phase 1 demand (100–200 Mt cumulative) and the current inventory of Phase 1-eligible credits with valid corresponding adjustments is the single largest driver of pricing in the compliance market. Current eligible credits have traded in the range of $18–35 per tonne through 2024 and into 2025, with wide bid-offer spreads and thin secondary liquidity.^[11] Contracted forward supply for Phase 2 delivery has been reported at wider spreads, reflecting programme-approval risk and delivery risk over a three-to-seven-year horizon.

Two structural features compound the supply constraint:

Corresponding-adjustment scarcity. Host countries have discretion over whether to authorise corresponding adjustments, and in some cases have political incentives to conserve credits for their own NDC accounting rather than authorising them for export.

Vintage restrictions. TAB decisions have restricted eligible vintages, excluding older credits from earlier project generations. A large volume of previously-issued VCM credits does not qualify.

The consequence: airlines cannot rely on the standard voluntary secondary market to satisfy CORSIA obligations at current prices. They must contract forward with project developers, agree to primary-issuance offtake, or pay a scarcity premium in the secondary market.

The cost of non-compliance

CORSIA is administered by ICAO but enforced by participating states through domestic legal frameworks. An airline that fails to retire the required volume of CORSIA-eligible credits by its compliance deadline faces a mix of financial, operational, and reputational consequences that compound over time.

Financial penalties. States that have implemented CORSIA in domestic law generally impose a per-tonne financial penalty for shortfall. The pattern established under the European Union Emissions Trading System — which for intra-EEA aviation operates in parallel with CORSIA — is a penalty of €100 per tonne of shortfall, indexed to inflation from 2013, with payment of the penalty explicitly not discharging the underlying obligation.^[12] The United Kingdom’s UK ETS follows a similar structure. Other Phase 1 participating states without a pre-existing ETS have implemented enforcement through their civil aviation authorities, with penalties set case by case.

Continued obligation after penalty. Under most implementation frameworks, an airline that pays the shortfall penalty must still deliver the missing units in the following compliance cycle. The penalty is punitive, not substitutive. Repeated shortfall can escalate to withdrawal of operating rights on individual routes, though this sanction has not been applied to a major carrier in the CORSIA context to date.

Public disclosure. States publish annual compliance status. An airline in shortfall appears on public compliance registers, exposing the operator to media, NGO, and analyst attention that would otherwise be absorbed by regulatory-only interactions.

Reputational and commercial consequences. Beyond the direct penalty, the market consequences of non-compliance include:

• Corporate travel programme exclusion. Large multinational corporate travel buyers increasingly filter preferred-carrier panels by sustainability disclosures. Airlines with active non-compliance status routinely fall off preferred-carrier lists at buyers with formal ESG procurement policies.^[13]
• ESG rating downgrades. MSCI, Sustainalytics, and other ESG ratings agencies weight regulatory compliance heavily. A CORSIA non-compliance flag propagates through indices tracked by ESG-tilted funds, affecting the airline’s cost of capital and its eligibility for sustainability-labelled bond and equity indices.
• Insurance and financing. Aviation insurance underwriters and airline financiers have begun incorporating climate-compliance status into risk assessments. Some structured aircraft financings now include ESG covenants that could be tripped by CORSIA shortfall.
• Investor litigation. Where an airline’s public statements assert CORSIA compliance and material shortfall subsequently emerges, securities-law exposure arises in jurisdictions with mature investor-protection regimes.

The economic reality is that the penalty per tonne is not the dominant cost of non-compliance for a large listed carrier. The dominant cost is the compounding erosion of preferred-carrier status, ESG rating, and cost of capital — components that individually are small but which stack over multi-year horizons into a materially higher weighted-average cost of capital than compliance would have carried.

Non-participating states and the political frontier

CORSIA’s uneven participation profile is the largest single source of competitive-distortion concern in the scheme. Four sizeable aviation economies — China, India, Brazil, and Russia — have not volunteered for Phase 1. Their flag-carriers face no Phase 1 offsetting obligation on flights unless both endpoints are participating states; on flights between two non-participating states they face no obligation at all.

Several other states have gone further than mere non-participation and expressed formal objection to the scheme, on grounds ranging from concerns about corresponding-adjustment structures to broader positions on climate finance and equity. Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela have registered variously worded reservations at ICAO Assemblies.^[14] Their positions are legally distinct from mere non-participation but the commercial consequence for their airlines during Phase 1 is similar — no Phase 1 offsetting obligation.

The 2027 transition is where the picture changes materially. Phase 2 exempts only Least Developed Countries, Small Island Developing States, and Landlocked Developing Countries whose international RTK share falls below the specified threshold. China, India, Brazil, and Russia are not exempt. Their major carriers — Air China, China Southern, China Eastern, Air India, IndiGo, LATAM, Aeroflot — will carry CORSIA obligations from 2027 onward, subject to whatever domestic implementation their governments choose to enact.

Enforcement of the Phase 2 obligation for non-cooperative states is where the scheme’s political architecture is genuinely tested. ICAO does not have direct enforcement powers over airlines; it relies on the “state of the operator” to legislate and enforce compliance. If a state declines to implement CORSIA in domestic law, ICAO’s remedies are diplomatic — Assembly-level censure — rather than legal.

The commercial consequences for carriers based in non-cooperative Phase 2 states extend beyond the ICAO frame:

EU market access via EU ETS. For flights within the European Economic Area, the EU Emissions Trading System applies regardless of CORSIA participation. Chinese, Indian, and Brazilian carriers operating flights that touch two EEA points are captured by EU ETS and required to purchase EU allowances irrespective of their home state’s CORSIA position. This has been the operative rule since 2012.^[15]

UK market access via UK ETS. Since 2021 the UK has operated a separate emissions trading system on similar lines. Same principle: coverage is set by route geography, not by carrier nationality.

Alliance and codeshare pressure. Star Alliance, oneworld, and SkyTeam member airlines face growing pressure from their EU, UK, and US alliance partners to align on sustainability disclosure. Codeshare marketing agreements with EU carriers become difficult to sustain when the code-carrying partner is in open non-compliance with the framework the marketing carrier is subject to.

Corporate travel buyers. Multinational corporate travel programmes with formal ESG procurement policies — a substantial share of the premium business-travel market — routinely exclude non-compliant carriers from preferred panels. For carriers whose home markets are dominated by state-owned enterprise travel (Chinese majors particularly), this pressure is muted; for carriers materially dependent on Western corporate travel spend (Indian international carriers, Latin American majors), it is real.

The Trump administration and United States participation

The Biden administration confirmed United States participation in CORSIA Phase 1 in 2023. The Federal Aviation Administration published guidance on operator reporting; the Environmental Protection Agency confirmed CORSIA’s alignment with the Clean Air Act framework.

The second Trump administration, taking office in January 2025, announced withdrawal from the Paris Agreement and directed federal agencies to review climate-related regulations across the federal government. As of writing, the Trump administration has not formally withdrawn US participation from CORSIA Phase 1, but the direction of policy travel has introduced material uncertainty into four areas:^[16]

• US operator reporting. The FAA and EPA reporting frameworks that underpin CORSIA compliance for US airlines have been placed under review. If those frameworks are dismantled or de-prioritised, US airlines lose the administrative basis on which to demonstrate compliance to ICAO’s mechanism.
• Voluntary Phase 1 participation. The United States is a Phase 1 volunteer. The administration retains discretion to withdraw voluntary participation. If it does, US carriers face no Phase 1 obligation from the date of withdrawal onwards.
• Phase 2 mandatory participation. Phase 2 is mandatory for all ICAO member states except the narrow LDC/SIDS/LLDC exemption. The United States is not exempt. Formal withdrawal from Phase 2 would require an unprecedented step of derogation from ICAO obligations — a step no ICAO member state has taken in modern practice.
• Bifurcated exposure for US airlines. US carriers face a split obligation profile. Flights to the EU and UK remain subject to EU ETS and UK ETS regardless of US federal policy — a portion of the offsetting obligation is European-jurisdiction-set and unaffected by any US withdrawal. Flights to other participating states (Japan, Singapore, UAE, Qatar, Canada, Australia, New Zealand) may face different treatment depending on how each participating state chooses to handle US carrier obligations in the event the US steps back.

For the US airline procurement community, the operative posture is contingency-based: continue Phase 1 compliance preparation on the assumption that US participation persists, while modelling the impact of a scenario in which US participation ceases and only the EU ETS and UK ETS obligations remain. For non-US airlines contracting Phase 2 supply, the political volatility around US participation is a factor in demand-side forecasting — reduced US demand narrows the total obligation but concentrates pricing power in the remaining participating states.

The buy-side implication of demand-side political fragility is important and not intuitive: it is not symmetrically bad for supply-side project economics. Bulk forestry credits that were being scaled specifically to serve compliance-market demand face the most direct exposure to US withdrawal. Higher-integrity co-benefit credits — community water, clean cooking with gender-responsive certification — are less exposed because their buyer base is broader (voluntary corporate ESG buyers, high-integrity commitments buyers, philanthropic co-financing) than pure compliance. A US withdrawal would soften the bulk forestry price without meaningfully shifting demand for the story-carrying portion of the market.

The European Union — parallel regime, tightening compliance, and the 2026/2028 review

The most consequential recent regulatory movement in this space has been on the European side. While the United States has moved toward looser federal implementation, the European Union has moved in the opposite direction — tightening CORSIA implementation for EU-registered operators, phasing out free EU ETS allocation for aviation, and building in review mechanisms that give the EU discretion to expand its own emissions trading scheme’s coverage if CORSIA is judged insufficient. For airlines, procurement teams, and project developers, EU decisions are today the strongest single-jurisdiction signal about the compliance market’s trajectory.

The bifurcated EU compliance framework

Under Directive (EU) 2023/958 — adopted as part of the Fit for 55 legislative package — EU-registered operators face a bifurcated compliance obligation calibrated to route geography:^[17]

• Intra-EEA flights (between two European Economic Area airports) are covered by the EU Emissions Trading System (EU ETS). Airlines must surrender EU allowances (EUAs) — not CORSIA-eligible units — for these emissions.
• Extra-EEA flights to or from a CORSIA-participating state are covered by CORSIA. Airlines must surrender CORSIA-eligible units for the portion of these emissions above the CORSIA baseline.
• Extra-EEA flights to or from a non-participating state are currently subject to a “stopping the clock” derogation — no obligation is imposed pending the outcome of the CORSIA effectiveness reviews (see below).

The practical consequence for a mid-size European carrier is that its compliance stack is layered: EU allowances for the European short-haul network, CORSIA units for long-haul to participating states, and unresolved treatment for long-haul to non-participating states. The intra-EEA EU ETS portion typically dominates the compliance budget in tonnage terms; the extra-EEA CORSIA portion is smaller in tonnage but carries higher per-tonne price uncertainty because of eligible-supply scarcity.

Free allocation phased out

The most immediate cost impact for EU carriers is the complete phase-out of free EU ETS allowance allocation for aviation. Under the pre-2024 regime, aviation received free allocation covering the majority of its ETS obligation. Directive (EU) 2023/958 phases free allocation down in defined annual steps and eliminates it entirely by 2026. From 2026 onwards, EU carriers must purchase 100% of their EU ETS obligation at market prices.^[18]

At recent EUA prices in the €65–€90 per tonne range, the cash-cost impact for a large European carrier operating intensively within the EEA is measured in hundreds of millions of euros per year — an order of magnitude larger than the CORSIA-eligible unit cost for the same operator’s extra-EEA obligation. For procurement teams at European airlines, this makes EUA hedging and SAF cost-reduction strategies at least as commercially important as CORSIA-eligible unit sourcing.

The 2026 and 2028 effectiveness reviews

Article 25a of the amended ETS Directive requires the European Commission to review the effectiveness of CORSIA against Paris Agreement objectives, first in 2026 and again in 2028.^[19] The reviews assess whether CORSIA’s implementation — including the eligible-units pipeline, corresponding-adjustment coverage, and the volume of participating states — is delivering emissions outcomes consistent with a 1.5°C-aligned trajectory.

The consequence attached to those reviews is material: if the Commission determines CORSIA is not delivering its stated objectives, the EU retains discretion to reinstate EU ETS coverage of extra-EEA flights of EU-registered operators, replacing CORSIA for those flights with a stricter EU-designed obligation. In effect, the EU has given itself a unilateral escape hatch from the ICAO framework if CORSIA underperforms. This is the single largest source of forward regulatory risk for the CORSIA-eligible credit market on the demand side — an outcome in which the EU takes its flights off CORSIA would materially reduce eligible-unit demand from European carriers.

The buy-side working assumption in mid-2026 is that the first review outcome — expected late 2026 — is likely to note significant gaps in eligible-unit supply and corresponding-adjustment availability but to defer any decision on ETS re-expansion until the 2028 review. That posture keeps CORSIA as the operative framework for the Phase 1 window while preserving EU leverage over ICAO for Phase 2 design decisions.

Non-CO₂ effects and ReFuelEU Aviation

Two adjacent EU policy measures interact directly with CORSIA compliance economics:

Non-CO₂ monitoring, reporting, and verification. From 2025, EU-registered operators are required to monitor and report the non-CO₂ climate impacts of their flights — principally nitrogen oxide emissions, contrail formation, and particulate matter.^[20] The MRV obligation does not yet come with a compliance cost, but the Commission is empowered to introduce a pricing mechanism for non-CO₂ effects from 2028 onwards. This would open a new category of compliance obligation that neither CORSIA nor the current EU ETS captures.

ReFuelEU Aviation SAF mandate. Regulation (EU) 2023/2405 imposes a mandatory sustainable aviation fuel blending obligation on fuel suppliers at EU airports: 2% by 2025, 6% by 2030, 20% by 2035, and 70% by 2050.^[21] The blending mandate has two effects on CORSIA compliance economics. First, it substantially expands SAF supply — every tonne of qualifying SAF combusted reduces the CORSIA offsetting obligation one-for-one under the CORSIA lifecycle methodology, so SAF availability directly reduces credit demand. Second, it creates a price signal for SAF investment that is independent of CORSIA — meaning SAF supply expands at a rate driven by the mandate, not by CORSIA-driven demand.

For CORSIA-eligible credit developers, the ReFuelEU mandate is a partial substitute for their product. As SAF penetration rises through the 2030s, the marginal-tonne obligation for European carriers shifts progressively from offsets to fuel purchases. The absolute size of the credit market in the late Phase 2 window depends heavily on how fast SAF supply actually clears the mandated blending percentages.

Enforcement — the EU as the stricter jurisdiction

EU enforcement of the aviation compliance regime is materially stronger than any other CORSIA participating state’s. The €100/tonne shortfall penalty applies across the EU ETS and CORSIA obligations of EU-registered operators; the penalty does not discharge the underlying obligation; and repeated shortfall can trigger operating-permit review by national aviation authorities. The Commission has also published a public annual compliance table naming operators in shortfall.^[22]

The net position for the compliance market: European decisions have consistently pushed toward tighter enforcement, more expensive compliance, and preserved regulatory optionality to expand ETS coverage if CORSIA falls short. This is the largest single source of durable demand for high-integrity CORSIA-eligible credits — European carriers cannot politically or commercially afford non-compliance in a regime where their home-state regulator has repeatedly demonstrated it will tighten rather than relax the framework.

Strategic responses

1. Bulk-and-blend portfolio construction

A pure lowest-cost strategy — buying only the cheapest qualifying credits — leaves airlines exposed to two risks: reputational risk if the credits are subsequently criticised on integrity or human-outcome grounds, and delivery risk if the specific programme faces political or regulatory challenge.

A pure highest-integrity strategy — buying only the most integrity-labelled credits (ICVCM Core Carbon Principles-labelled, gender-responsive certification, community water and clean-cooking projects) — is prohibitively expensive at compliance scale. Highest-integrity supply typically clears at $25–60 per tonne, versus $10–20 for bulk forestry programmes even within the CORSIA-eligible universe.

The emerging airline strategy is a blend: 70–85% of volume in bulk-priced qualifying units (typically forestry, ARR — afforestation, reforestation and revegetation — or aggregated cookstove pools), and 15–30% in higher-integrity story-carrying credits that can be foregrounded in customer communications, sustainability reports, and ESG disclosure.

Human-centered project credits — safe water infrastructure, clean cooking with health and gender co-benefits, community-verified — sit at the story-carrying end of this blend. They cost more per tonne but generate positioning that pure forestry cannot. For airlines whose customer base is increasingly ESG-attentive — business travel buyers, sustainability-labelled corporate travel programmes, premium leisure segments — the blend delivers both compliance and narrative.

SaniTap’s Madagascar cookstove and safe-water portfolios, currently on the CORSIA-eligibility pathway with Letter of Approbation in hand from the Government of Madagascar, are designed for this blend allocation. See “The path to CORSIA eligibility” in this Knowledge Hub for the specific project-side requirements.

2. Forward contracting

Given Phase 2 supply uncertainty, airlines with balance-sheet capacity are contracting forward for delivery in 2027 onwards. Standard structures include:

Pre-issuance offtake agreements. The airline commits to purchase upon issuance; the project developer commits to nominate the airline as retirement account. Typical volumes 100,000 to 1,000,000 tonnes per contract, tenors of three to seven years.

Portfolio agreements with project aggregators. The airline contracts with a developer or intermediary managing a portfolio of projects, receiving an agreed volume from the pooled output. Reduces single-project delivery risk.

Contingent contracts. Pricing and volume tied to eligibility outcomes, with call-off if the project’s programme completes TAB approval within a specified window.

3. Storytelling — and its limits

The compliance obligation is administrative; the reputational value depends on communications. Airlines building strategic offset positions are increasingly co-branding programme partnerships, publishing project-level detail in sustainability reports, and using project-specific storytelling — photos, community outcome data, third-party verifications — in customer-facing materials. Human-centered credits carry stories that forestry credits, however high-integrity, structurally do not.

The counter-argument — that any airline offsetting is inherently reputationally fragile — is a real strategic risk. Airlines that lean too heavily on offset-based communications while their absolute emissions grow face NGO and press scrutiny. The mitigation is honest positioning: offsets as part of a broader decarbonisation strategy (fleet renewal, operational efficiency, SAF procurement), not as a replacement for absolute reduction.

Preparation checklist for airlines

Now (2026):

1. Baseline and forecast international CO₂ emissions to 2030, with sensitivity around traffic recovery and SAF uptake.
2. Model CORSIA obligation across the sectoral-to-individual growth-factor transition, with scenarios for corridor recovery and network growth.
3. Establish a shortlist of TAB-approved programmes with corresponding-adjustment coverage.
4. Approach at least two project developers with in-scope Phase 1 supply and Phase 2 forward supply.
5. Commission integrity due diligence on shortlisted programmes — ICVCM CCP alignment, community consultation records, methodology assessment, host-country stability.

Before 2027:

6. Sign forward contracts covering 60–80% of projected Phase 2 obligation to lock in supply.
7. Identify the story-carrying portion (15–30%) and contract with developers whose project-level narrative is verifiable and defensible.
8. Establish retirement processes, registry accounts, and audit trail.
9. Align sustainability communications with the actual project mix — no over-claiming.

Ongoing:

10. Track TAB decisions on eligible programmes and vintages.
11. Track host-country corresponding-adjustment policies.
12. Monitor SAF cost and availability — every tonne of qualifying SAF reduces one tonne of offset need.

The buy-side case for higher-integrity co-benefit credits

The economic argument for allocating a portion of the offsetting portfolio to higher-integrity human-centered credits like SaniTap’s is not that they clear cheaper than bulk forestry — they do not. It is that they carry structural properties bulk forestry cannot:

• Story-carrying. Named community, named health outcome, named region, named baseline.
• Reputational hedging. Highest-integrity labels (ICVCM CCP, gender-responsive certification) provide defensibility if the bulk portion is later criticised.
• Regulatory resilience. High-integrity credits typically survive tightening TAB criteria; bulk-priced forestry has been more exposed to vintage-exclusion decisions.
• Portfolio diversification. Methodology, geography, and integrity-label diversification reduce the risk that a single decision — a TAB exclusion, an NGO investigation, a host-country dispute — collapses a large share of the airline’s compliance stack.

For a 500,000-tonne annual Phase 2 obligation, allocating 100,000 tonnes to story-carrying credits costs roughly 3–5% more than pure lowest-cost procurement in absolute budget terms, while providing the majority of the reputational upside and a material share of the regulatory-risk hedge. In portfolio terms, the co-benefit allocation is priced not as a premium but as insurance.

References

---

1. International Civil Aviation Organization. 2022. Resolution A41-22: Consolidated statement of continuing ICAO policies and practices related to environmental protection — Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Assembly, 41st Session. Available via the ICAO CORSIA documentation portal. See https://www.icao.int/environmental-protection/CORSIA/. ↩︎

2. Ibid., Appendix A. State-participation categories and exemption thresholds are enumerated in the operative paragraphs. ↩︎

3. Ibid. Distribution of offsetting requirements to individual operators is set out in the same Resolution’s Appendix A. ↩︎

4. ICAO Environment Branch. CORSIA Implementation Elements. Publicly available via the ICAO CORSIA website; specifies the year-by-year weighting between sectoral and individual growth factors for each compliance year. See https://www.icao.int/environmental-protection/CORSIA/. ↩︎

5. ICAO Council. CORSIA Sustainability Criteria for CORSIA Eligible Fuels and CORSIA Methodology for Calculating the Actual Life Cycle Emissions Values for CORSIA Eligible Fuels. Both documents form part of the CORSIA implementation package. See https://www.icao.int/environmental-protection/CORSIA/. ↩︎

6. International Air Transport Association. IATA Global Outlook for Air Transport (various updates 2023–2025). Provides IATA’s working projections for CORSIA offsetting demand. See https://www.iata.org/. ↩︎

7. Range represents the envelope of published analyst estimates from the International Emissions Trading Association (IETA), BloombergNEF, and Trove Research. Precise numbers vary with assumed SAF penetration, traffic-growth trajectories, and the pace of Phase 2 mandatory-state uptake. See https://www.ieta.org/. ↩︎

8. Voluntary carbon market annual retirement volumes are reported by registries (Verra, Gold Standard, ACR, CAR, ART) and aggregated by market data providers including BloombergNEF, Ecosystem Marketplace, and Trove Research. See https://about.bnef.com/. ↩︎

9. ICAO Council. CORSIA Emissions Unit Eligibility Criteria (EUC). Available on the ICAO CORSIA documentation portal. See https://www.icao.int/environmental-protection/CORSIA/. ↩︎

10. ICAO Technical Advisory Body. Decisions on eligible programmes are published following each TAB review cycle. The list of Phase 1-eligible programmes and applicable vintages has been updated multiple times since 2020 and continues to evolve. See https://www.icao.int/environmental-protection/CORSIA/. ↩︎

11. Price ranges cited are indicative of secondary-market activity through 2024–2025 and are subject to revision as forward supply is contracted, TAB decisions widen or narrow the eligible universe, and corresponding-adjustment authorisations are issued or withheld. ↩︎

12. Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, Article 16(3), as amended. The €100 per tonne shortfall penalty was set at the 2005 introduction of the ETS and is indexed to the European consumer price index; payment of the penalty does not release the operator from the obligation to surrender the missing allowances. See https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20231005. ↩︎

13. Global Business Travel Association and various corporate-travel management consultancies have published surveys through 2023–2025 documenting the rising incidence of formal ESG procurement criteria in preferred-carrier programme selection, particularly among large multinational buyers with Science-Based Targets Initiative commitments. See https://sciencebasedtargets.org/. ↩︎

14. ICAO Assembly session records include the reservations filed by these states at the 39th, 40th, and 41st Assemblies. The specific wording of each reservation varies by state and by Assembly and is available in the ICAO Assembly documentation portal. See https://www.icao.int/environmental-protection/CORSIA/. ↩︎

15. Directive 2008/101/EC extending the EU ETS to aviation activities within the EEA; the intra-EEA scope has been maintained under successive amendments including Directive (EU) 2023/958. See https://eur-lex.europa.eu/eli/dir/2023/958/oj. ↩︎

16. US Federal Register publications and Executive Orders of January to March 2025 relating to the review of federal climate regulations and withdrawal from international climate frameworks. The specific status of CORSIA implementation guidance from the Federal Aviation Administration and the Environmental Protection Agency has been under review since Q1 2025; readers should verify the current position at the time of decision-making. ↩︎

17. European Parliament and Council. Directive (EU) 2023/958 of 10 May 2023 amending Directive 2003/87/EC as regards aviation’s contribution to the Union’s economy-wide emission reduction target and the appropriate implementation of a global market-based measure. Published in the Official Journal of the European Union. See https://eur-lex.europa.eu/eli/dir/2023/958/oj. ↩︎

18. Ibid., Article 3d and annexed provisions on free allocation phase-down for aviation. Free allocation for aviation is reduced by 25 percentage points per year from 2024 and eliminated entirely from 2026 onwards. ↩︎

19. Ibid., Article 25a. The Commission is required to submit reports to the European Parliament and Council in 2026 and 2028 assessing the effectiveness of CORSIA against Paris Agreement objectives and, if warranted, to accompany those reports with legislative proposals to bring extra-EEA flights of EU-registered operators back within EU ETS scope. See https://eur-lex.europa.eu/. ↩︎

20. European Parliament and Council. Regulation (EU) 2023/957 on the monitoring, reporting and verification of non-CO₂ aviation effects. The MRV obligation commenced 1 January 2025; the Commission is empowered to bring forward legislative proposals for a pricing mechanism from 2028 based on the MRV data collected. See https://eur-lex.europa.eu/eli/reg/2023/957/oj. ↩︎

21. European Parliament and Council. Regulation (EU) 2023/2405 on ensuring a level playing field for sustainable air transport (ReFuelEU Aviation). Sets minimum blending shares of sustainable aviation fuels at Union airports: 2% from 2025, 6% from 2030, 20% from 2035, 34% from 2040, 42% from 2045, and 70% from 2050. See https://eur-lex.europa.eu/eli/reg/2023/2405/oj. ↩︎

22. European Commission, DG CLIMA. Annual publication of aviation compliance status under Directive 2003/87/EC, including operator-level shortfall data. The Commission’s public compliance-table publication began in the mid-2010s and has continued through successive ETS reform cycles. See https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20231005. ↩︎