Aviation Credits Market Outlook: CORSIA Gets its Wings

In the quest to legitimize carbon credit markets that have been bruised by controversy, the United Nations-led aviation decarbonization scheme known as CORSIA emerges as a powerful tool. Prices are on track to reach $97 per metric ton of carbon dioxide equivalent in 2027, 28 times higher than the average price for voluntary carbon credits today. Fueled by airlines’ decarbonization obligations and expensive low-carbon fuels, demand for credits is set to grow 5% annually until 2035. But there’s a catch: markets like the US and the European Union could opt out of the scheme with no repercussions, jeopardizing its future.

By the Numbers

Decarbonizing International Aviation

  • Some 126 markets comply with the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA. Airlines may use either approved carbon credits or low-carbon fuels to address covered emissions from international flights. As it stands, offsetting provides a much cheaper option than adopting sustainable aviation fuels at scale.
  • While only one project is approved for use, with 15MtCO2e, this is likely to be short-lived with supply expected to double offset requirements across Phase I (2024-26), dominated by land-use credits. As a result, prices are expected to reach a record low of $12.4/ton in 2026.
  • However, prices quickly surge to $96.5/ton in the first year of Phase II (2027-35) when the scheme expands to 135 markets, including Russia, China and India. Airlines offsetting requirements will total 1.23GtCO2e by 2035. Maintaining prices at around $40.4/ton in 2035 is contingent on governments approving enough credits for official CORSIA use.
  • A large source of uncertainty for CORSIA is participation. Aligning with Donald Trump’s policies, the US could leave, shrinking international offsetting requirements by 14%. The subdued demand for credits relaxes prices, and they peak at only $44/ton in 2030. In contrast, the EU’s participation is reliant on the scheme’s effectiveness, with a review due in 2026. Aligning CORSIA with the EU’s decarbonization policies would push up offset requirements by 153% compared to the base case, seeing prices soar to $477/ton in 2027.
  • On the supply side, the responsibility to maintain the environmental integrity of CORSIA credits falls on governments. A laxer approach quickly risks an oversupplied market and would suppress prices to just $13/ton on average throughout the duration of the scheme.

BNEF clients can access the full report here.

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
 
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us