CORSIA: The UN's mandatory carbon offset scheme for international aviation

Key Takeaway

Here's what's happening: CORSIA shifts from voluntary to mandatory in 2027, requiring airlines - and by extension, every company buying international flights - to offset emissions growth above 85% of 2019 levels.

Why it matters for companies: Aviation encounters $25-60 per ton carbon surcharges and non-compliance penalties of up to $125 per ton, with a projected 30% supply gap looming when compliance begins: Companies contracting now avoid scrambling for credits when 193 countries enforce mandatory compliance.

Section 1: Framework Background

Concept & Purpose: CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation, is the UNs global market‑based measure to cap net CO₂ growth from international flights at 85% of 2019 levels. Airlines must first cut fuel burn and deploy sustainable aviation fuel, then purchase Eligible Emissions Units (EEUs) for any residual emissions growth. The scheme exists to address emissions of cross-border flights which fall outside national carbon budgets.

Impact & Status: Since 2021 CORSIA has run in a voluntary pilot (2021-2023) and first phase (2024-2026); by 1 January 2025 129 States have volunteered, covering nearly all long‑haul traffic. Comprehensive MRV of emissions already applies to every operator emitting more than 10 000 t CO₂ annually, so compliance data streams are live and audit‑ready.

Section 2: Expected Legislative Changes

Upcoming Deadline: The second phase (2027-2035) will be mandatory to all 193 member states (with certain exemptions). Compliance reports covering 2024‑2026 emissions are due to national authorities by 31 January 2028.

Regulatory Adoption: The biggest roadblocks are the slow expansion of EEU credit supply and related uncertainty on price levels. Only six programmes are approved today; ICAO and independent modelling indicate a ~30 % supply gap when mandatory compliance starts in 2027. Simultaneously, Brussels and several G20 regulators are weighing parallel schemes (e.g., extending the EU ETS to extra‑EU flights), potentially adding duplicate cost layers.

Section 3: Risks & Opportunities

Risks of Inaction:  Late movers face a potential price and volume risk. Price scenarios predict prices per credit between US$25 in the best case and US$60 in the supply crunch scenarios. Scarcity could push companies towards lower‑integrity credits, elevating reputational and legal risks as greenwashing scrutiny intensifies. Delayed engagement also compresses procurement windows, weakening leverage in credit negotiations.

Benefits of Proactive Engagement: Early movers can lower future compliance costs by locking in multi‑year offtakes for Eligible Emissions Units (EEUs). Forward contracting provides CFOs with predictable liabilities, smoothing earnings volatility once CORSIA turns mandatory. Integrating aviation offsets into enterprise‑wide Net‑Zero strategies buys time until sustainable aviation fuel reaches commercial scale, preserving travel‑enabled growth.

Conclusion – 3 Strategic Actions for CFOs/CSOs

CORSIA can be considered as the blueprint for the significant role CDR can play in future compliance markets to achieve international climate targets. Instead of being obliged to buy emission allowances in the respective ETS as for domestic flight emissions, airlines are asked to cap emission growth by supporting high-quality CDR projects. Supply of eligible credits has to now follow suit which itself hinges on fast approval of eligible methodologies. 

CSO/CFO should hence:

• Conduct a carbon‑liability assessment modelling compliance offset demand under price scenarios up to US$60/t.
• Establish procurement relationships now to provide better visibility into supply availability and potential volume savings.
• Integrate monitoring of host country authorization progress under Article 6 into ESG and management dashboard.

Appendix – Sources and Further Reading:

1. ICAO. CORSIA Overview (accessed Jul 2025)

2. ICAO. CORSIA Newsletter — May 2025, “129 Voluntary States”.

3. IATA. Fact Sheet: CORSIA — Jun 2025.

4. ICAO. CORSIA FAQs — Apr 2024.

5. ICAO/CAEP. Inputs to the 2025 CORSIA Periodic Review — 2025.

6. Sylvera. “CORSIA Phase 1 Pricing & Deadlines” — Jul 2025.

7. MSCI. CORSIA: Costs & Implications for the Airline Industry — Nov 2024.

8. European Commission. “Reducing Emissions from Aviation” — Jul 2024.

9. Reuters. “Will CORSIA pay for green projects—or greenwash?” — May 2025.

10. Financial Times. “European airline emissions set to exceed pre‑pandemic levels” — Apr 2025.

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