In 2016, the International Civil Aviation Organization (ICAO) introduced the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to help reduce the environmental impact of aviation. This global program focuses on addressing CO2 emissions from international flights by using a carbon offsetting approach.

CORSIA is a worldwide initiative that requires airlines and aircraft operators to balance any increase in CO2 emissions above the levels recorded during the pre-COVID-19 period of 2019-2020. The goal is to keep the net CO2 emissions from aviation stable while encouraging the exploration of additional methods to cut emissions. These methods include technological advancements, the use of sustainable aviation fuels, operational improvements, and better infrastructure.

The introduction of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) marks a significant step in the aviation industry’s fight against climate change. Since aviation is a major contributor to global greenhouse gas emissions, there’s growing pressure on the industry to become more environmentally friendly. CORSIA uses a phased approach to bring about change, with different countries joining in stages. The initial pilot phase began in 2021, where countries could choose to participate voluntarily. Later stages will require most countries to comply mandatorily.

A key part of CORSIA is carbon offsetting. Airlines can invest in approved projects that reduce carbon emissions in other areas, like reforestation or renewable energy projects, to balance out their emissions. This helps reduce aviation’s environmental impact and supports global sustainable development initiatives.

Beyond offsetting, CORSIA encourages airlines to adopt cleaner technologies and improve their operations. Airlines are investing in research and development to create more fuel-efficient aircraft with fewer emissions. Sustainable aviation fuels, made from renewable sources, also offer a promising way to cut down the carbon footprint of air travel. These fuels emit much less carbon than traditional fossil fuels and are increasingly being used in airline operations.

Infrastructure improvements are also crucial for reducing aviation emissions. Upgraded air traffic management systems, optimized flight routes, and improved airport facilities can lead to more efficient operations and lower fuel consumption. Cooperation between governments, aviation authorities, and industry stakeholders is essential to drive these improvements and meet CORSIA’s ambitious environmental goals.

In summary, CORSIA is a comprehensive strategy to address aviation’s environmental impact. By combining carbon offsetting with technological advancements, sustainable fuels, and better infrastructure, the aviation industry is taking meaningful steps toward a more sustainable future. As the world continues to prioritize climate action, CORSIA serves as a model for other sectors looking to reduce their carbon footprint and contribute to global sustainability efforts.

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Context

Domestic flights fall under the national climate action plans of the United Nations Framework Convention on Climate Change (UNFCCC), while international flights are overseen by the International Civil Aviation Organization (ICAO). According to the Intergovernmental Panel on Climate Change (IPCC), both domestic and international flights together make up about 2% of the world’s human-caused CO2 emissions. Specifically, international flights account for about 65% of the total fuel used by aviation globally, contributing around 1.3% to CO2 emissions worldwide.

To tackle climate change, the aviation industry is taking a multi-pronged approach that includes:

• Innovative Technologies: Developing new technologies to reduce emissions.
• Sustainable Aviation Fuels: Switching to fuels that are better for the environment.
• Operational Efficiency: Improving how efficiently flights operate.
• Better Infrastructure Utilization: Using airport and flight infrastructure more effectively.
• Global Market-Based Measures: Implementing CORSIA, a scheme to manage CO2 emissions by offsetting them.

In 2009, the aviation industry set three key goals to reduce its environmental impact:

• Fuel Efficiency: Aim for a 1.5% improvement in fuel efficiency per year from 2009 to 2020.
• Stabilizing CO2 Emissions: Keep CO2 emissions at 2020 levels to achieve carbon-neutral growth.
• Reducing CO2 Emissions: By 2050, cut net CO2 emissions to half of what they were in 2005.

In recent years, the aviation industry has made significant progress in reducing its impact on the environment through new technologies and policies. For instance, more efficient aircraft engines and lighter materials have helped lower emissions. Airlines are also investing in sustainable aviation fuels (SAFs), which can reduce emissions by up to 80% compared to regular jet fuel. These fuels come from renewable sources like agricultural waste, algae, and non-food crops, helping reduce dependence on fossil fuels.

Airlines are also improving flight routes and procedures to save fuel. Techniques like continuous descent approaches and using a single engine while taxiing are becoming common, which helps cut down emissions. Upgrading air traffic management systems also reduces unnecessary fuel consumption caused by delays and inefficient routes.

CORSIA, a key initiative for managing international aviation’s carbon emissions, requires airlines to offset their emissions with carbon credits. This encourages investment in environmental projects and supports sustainable growth in the aviation sector, ensuring the industry takes responsibility for its emissions while contributing to global climate goals.

Looking forward, the aviation industry is exploring groundbreaking ideas like electric and hybrid aircraft, which could revolutionize air travel and significantly reduce its environmental impact. As research continues, these innovations promise a more sustainable future for aviation, aligning with global efforts to fight climate change and create a greener, more efficient transportation system.

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CORSIA mechanism

CORSIA, or the Carbon Offsetting and Reduction Scheme for International Aviation, is a program designed to reduce carbon emissions from international flights by using carbon market offsets. Since technology and improved fuels alone can’t eliminate all CO2 emissions, CORSIA allows airlines to purchase carbon credits to offset the remaining emissions. These credits must meet strict standards to ensure effective management of the aviation industry’s carbon footprint. Airlines and aircraft operators, including major airlines, cargo carriers, and private jets, are responsible for offsetting their CO2 emissions based on their international flight activities.

CORSIA is implemented in phases to accommodate the different capabilities and resources of participating countries. The first two phases, from 2021 to 2023 and 2024 to 2026, are voluntary, allowing countries to join the scheme at their discretion. During these phases, CORSIA only applies to international flights between countries that have chosen to participate, promoting voluntary cooperation without immediate pressure. From 2027 onward, participation becomes mandatory for all countries, aiming to achieve more comprehensive global engagement.

This phased approach fosters international collaboration and encourages more countries to participate in reducing aviation-related emissions. By utilizing carbon market offsets, CORSIA not only helps reduce the aviation industry’s carbon footprint but also supports global projects focused on renewable energy, forest conservation, and sustainable development. These projects provide social and economic benefits to local communities. Additionally, the scheme incentivizes airlines to adopt cleaner technologies and more sustainable practices, leading to advancements in aircraft design, flight operations, and the use of sustainable aviation fuels.

As CORSIA moves into its mandatory phase, it will play a significant role in the global fight against climate change by setting a precedent for international cooperation and shared responsibility. This initiative demonstrates how industries can work together to achieve environmental goals, potentially serving as a model for other sectors looking to reduce their carbon footprint and contribute to a sustainable future.

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Monitoring, reporting and verification

Starting January 1, 2019, all countries with international flights must use a system called Monitoring, Reporting, and Verification (MRV) to track carbon dioxide (CO2) emissions from these flights. This requirement is separate from any obligations to offset emissions. The data collected by countries through MRV systems is essential for calculating the baseline for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and determining if aircraft operators need to offset their emissions.

Implementing MRV systems is an important step to help the aviation industry align with global efforts to reduce carbon emissions. It shows a commitment to being open and accountable in addressing environmental concerns related to international aviation. By requiring MRV systems, countries are encouraged to closely track their aviation emissions, providing a clearer understanding of the industry’s environmental impact.

The MRV system consists of three main parts:

• Monitoring: Accurately tracking emissions data.
• Reporting: Countries must submit emissions data to a central authority.
• Verification: Ensures the reported data is accurate and trustworthy.

These components work together to give a complete view of emissions, allowing stakeholders to make informed decisions about how to reduce emissions.

CORSIA’s baseline is a reference point to measure emissions growth and calculate offset requirements. The scheme aims to keep CO2 emissions at 2020 levels, requiring airlines to buy carbon offsets for any emissions that exceed this baseline. This encourages airlines to invest in cleaner technologies and improve fuel efficiency, contributing to a more sustainable aviation industry.

In addition to supporting global environmental goals, the MRV system provides a way for governments, airlines, and environmental organizations to work together. By sharing data and insights, they can develop innovative solutions to reduce emissions and minimize the aviation sector’s ecological footprint.

Implementing MRV systems also helps build public trust in the aviation industry’s commitment to sustainability. As people become more aware of environmental issues, transparency in emissions reporting can enhance the industry’s reputation and encourage more sustainable travel choices.

In conclusion, setting up MRV systems to track CO2 emissions from international flights is crucial in the global fight against climate change. By ensuring accurate monitoring, reporting, and verification, countries can significantly reduce the aviation sector’s environmental impact and contribute to a more sustainable future.

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CORSIA and EU-ETS

CORSIA vs. EU ETS: An Overview

CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) focuses on reducing the growth of carbon dioxide (CO2) emissions from international flights. Meanwhile, the EU ETS (European Union Emissions Trading System) targets emissions from flights within Europe and some flights outside the region. Under the EU ETS, airlines must have allowances equal to their emissions, but they don’t have specific requirements to offset emissions like in CORSIA.

How CORSIA and EU ETS Work Together

To make sure airlines follow both CORSIA and EU ETS, the European Commission has set rules that integrate the two systems. For flights covered by both programs, the EU ETS aligns its monitoring and reporting requirements so airlines don’t have to submit separate reports.

Combining Efforts: CORSIA and EU ETS

CORSIA and the EU ETS both aim to reduce aviation’s environmental impact but in different ways. CORSIA, created by the International Civil Aviation Organization (ICAO), is a global effort to offset carbon emissions from international flights. It ensures that airlines buy carbon credits to neutralize any emissions increase from 2020 levels.

The EU ETS, however, is a cap-and-trade system for emissions within Europe. It sets a limit on total emissions, encouraging airlines to lower their carbon footprint by providing financial rewards for reduced emissions.

Integrating these two systems involves a complex process of tracking, reporting, and verifying emissions. The European Commission has created guidelines to align these processes, making it easier for airlines to comply with both programs without extra paperwork. This integration shows the EU’s commitment to leading global efforts in fighting climate change through innovative collaboration.

Challenges and Future Prospects

Aligning CORSIA and the EU ETS has its challenges. Airlines must navigate complex regulations, keep up with technological changes, and manage the financial costs of these programs. The future of aviation’s environmental responsibility will likely involve more technological innovations, like more efficient aircraft and alternative fuels, to cut emissions at the source.

To continue developing these systems, collaboration among international governments, industry stakeholders, and environmental organizations is needed to balance economic growth with environmental sustainability. As people become more aware of aviation’s impact on climate change, the synergy between CORSIA and the EU ETS could serve as a model for other industries aiming to reduce their carbon footprint through coordinated global efforts.

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VCM price implication

The demand for CORSIA-eligible carbon credits is expected to increase significantly in the coming years, which could cause prices to rise. Therefore, it is important for airlines to develop an offsetting strategy to protect against possible future price hikes.

Currently, the International Civil Aviation Organization (ICAO) is still reviewing most carbon credit programs for eligibility in the first phase of CORSIA, which will run from 2024 to 2026. As of now, only two carbon standards, the Architecture for REDD+ Transactions (ART) and the American Carbon Registry, have been confirmed as eligible. However, it is expected that by the end of 2023, all standards that were eligible for the pilot phase (except the Clean Development Mechanism, CDM) will have updated their procedures to qualify for the first phase.

Airlines face significant challenges in developing an offsetting strategy due to potential future decisions by the ICAO Council. Only credits with vintages from 2021 onwards, along with a corresponding adjustment, will be eligible for this phase of the program. Currently, there is a limited supply of credits that meet the post-2021 criteria set by CORSIA, and these are expected to become available around 2024.

Finally, buyers of non-CORSIA carbon credits should consider acquiring high-quality credits that are not eligible under CORSIA to hedge against potential future price increases.

The aviation industry is under increasing pressure to address its carbon emissions as part of the global effort to combat climate change. CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) is a significant step toward achieving carbon-neutral growth in aviation by requiring airlines to offset their emissions above 2020 levels. This initiative aims to complement other efforts to reduce emissions within the sector, such as improving fuel efficiency and investing in sustainable aviation fuels.

Airlines must navigate a complex landscape of carbon markets and regulatory requirements as they develop their offsetting strategies. In addition to complying with CORSIA, airlines may need to engage with other regional or national carbon markets, each with its own set of standards and criteria. This necessitates a comprehensive understanding of the carbon credit market, including the quality and environmental integrity of the credits being purchased.

Furthermore, airlines must consider the reputational implications of their offsetting choices. As consumers become more environmentally conscious, airlines are expected to demonstrate a genuine commitment to sustainability. This means not only adhering to regulatory requirements but also proactively investing in projects that deliver tangible environmental and social benefits.

In summary, the implementation of CORSIA presents both challenges and opportunities for airlines. By strategically planning their offsetting strategies and investing in high-quality carbon credits, airlines can mitigate the risk of future price increases while reinforcing their commitment to sustainability and environmental responsibility.