As international aviation faces mounting pressure to curb emissions, compliance with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has become both an operational necessity and a reputational imperative.
At a recent Climate Impact X (CIX) webinar, industry experts highlighted a critical window of opportunity—and urgency—for airlines, aviation stakeholders and others to secure Eligible Emissions Units (EEUs), or CORSIA-eligible credits, before regulatory and market pressures drive prices higher and supply tighter.
Moderated by Saurabh Joshi, Head of Origination &Strategic Partnerships at CIX, the panel featured insights from KyooWon Oh, Senior Underwriter at the World Bank’s Multilateral Investment Guarantee Agency(MIGA); Peter Zaman, Partner at global law firm HFW; and Rueban Manokara, Global Lead for WWF’s Carbon Finance and Market Taskforce, and member of the International Civil Aviation Organisation’s (ICAO) Technical Advisory Body (TAB) for CORSIA.
Here are the key takeaways:
The biggest misconception among airlines and buyers? That they’re on the hook if something goes wrong with a credit’s eligibility. Not so. “According to the eligibility criteria set by TAB, this risk is borne by the standards—not by the airlines or buyers,” said Peter.
If a Letter of Authorisation (LoA) from the host government is revoked, or the corresponding adjustments (CAs) necessary to avoid double-claiming at the host country and airline level are disputed, the legal liability sits squarely with the standard or registry that issued the credit.
For buyers, this means compliance risk is largely mitigated by purchasing credits with the CORSIA-eligible label. While this simplifies buyer obligations, it puts heightened scrutiny on standards—how each registry manages risk directly impacts the market perception and future value of credits.
For a deeper dive into these legal intricacies, read the below HFW papers:
· CORSIA compliance – The unequal choices that airlines face in the first phase
· CORSIA eligible emissions units and an airline’s offsetting obligations
As post-pandemic air travel rebounds, airline emissions are climbing—yet the supply of CORSIA-eligible credits is struggling to keep pace. The bottleneck largely stems from stringent requirements for registry approval and the need for CAs, which remain complex and slow-moving.
Highlighting early signs of market commitment, Rueban said, “Last year was momentous for CORSIA, with near-perfect compliance from reporting countries. This signals strong industry and governmental support.” With the EU set to review CORSIA in 2026, tighter eligibility rules and enforcement mechanisms may be on the horizon—likely further straining supply pipelines.
KyooWon added, “More than 80% of project developers that MIGA has discussed with are aiming to produce correspondingly adjusted credits, but not all of them will flow into CORSIA. Airlines should plan their procurement accordingly.”
Meanwhile, sustainable aviation fuels (SAF), though recognised as a compliance pathway, remains out of reach for many airlines due to its high cost (3-4x that of jet fuel). Until SAF scales and becomes cost-effective, carbon credits will remain the most viable near-term option for compliance—placing even more pressure on limited supply.
Historically, many airlines have adopted a “wait and see” approach. But with prices still low and the risk of penalties looming, that strategy may no longer be wise. A sudden shift in penalty enforcement or market sentiment could spike prices quickly.
Peter highlighted, “The price of CORSIA-eligible credits is currently undervalued. If the absence of a penalty is stopping you from acting, consider this: what if a penalty is introduced at $100 per tonne, compared to the $20 price tag for credits today? Credits are not going to stay at $20 a tonne very long.”
Airlines can also use forward contracts to lock in current prices for two to three years, but that window is closing. With a finite supply of eligible credits and growing competition—especially as developers shift toward higher-priced compliance markets—delays today could mean paying significantly more tomorrow.
Political risk insurance, such as MIGA’s breach-of-contract coverage, offers a potential solution for managing sovereign risk in host countries—but its use in the carbon markets remain constrained.
KyooWon explained that insurance solutions for double-claiming risk are limited and bottlenecked by lack of legally obligatory commitment on CAs. "Most LOAs today are too vague and lightly worded. They are not considered legally binding or enforceable, making broad insurance coverage difficult. Until host country practices mature, insurers may not feel comfortable offering products to more projects.”
“However, if the risk of the invalidation of lateral authorisation is transferred to third parties like insurance companies, then the lateral authorisation should be drafted in a way to be acceptable and to meet the requirements to achieve the insurability, MIGA’s LoA template was launched at COP29 to address this issue and to facilitate guarantee issuance in support of private investors engaged in Article 6 carbon markets,” he added.
While MIGA has supported a few pilot projects, wide-scale deployment is slowed by legal gaps in current LoA frameworks. Airlines and buyers banking on insurance products or buffer pools to de-risk purchases may find those solutions scarce, costly or slow to scale.
The message from the panel was unequivocal: The current market presents a narrow window to secure CORSIA-eligible credits at accessible prices—before regulatory changes, potential penalties and intensifying demand drive up prices or constrain supply.
CIX can help streamline your CORSIA buying journey, from procurement through to settlement, custody and retirement. Connect with us at [email protected] to learn more!
To watch the full webinar, click here.
Climate Impact X
May 7, 2025