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Ecosystem Marketplace Forecasts Ample Supply of CORSIA Carbon Credits If ICAO Council Limits Eligibility to Post-2016 Offsets

Study underscores risk of flooding airline carbon market if ICAO reboots old offsets


The international aviation sector is committed to delivering carbon neutral growth for flights between countries between 2021-2035. Airlines will be able to purchase carbon offset credits to meet their obligations through the new Carbon Offsetting and Reduction Scheme for International Aviation program (CORSIA).

This week, the UN’s International Civil Aviation Organization (ICAO) will decide which carbon credits airlines will be allowed to use to meet their obligations during CORSIA’s critical first three-year pilot phase which begins on January 1, 2021.

The question of which credits will be eligible for CORSIA has been a subject of debate. ICAO could opt to bar all credits from projects generated before its baseline year of 2020, a restriction advocated by some environmental groups but which could create uncertainty around future supply. Alternatively, ICAO might grant eligibility to credits from projects initiated in the period 2013-2020. However, this would open the door to a large number of projects, some of which have faced reports of poor offset credit quality. A “middle way” is to allow offsets based on emission-reduction activities undertaken between January 1, 2016 and December 31, 2020, and created under a limited number of carbon standards. News reports indicate ICAO is considering this compromise, although ICAO has not publicly confirmed this.

To understand what’s at stake, Ecosystem Marketplace, an initiative of Forest Trends, today released analysis of potential carbon credit supplies relative to current forecasts of demand. The analysis concludes that supplies are more than adequate to meet demand under a range of scenarios.

Specifically, Ecosystem Marketplace finds that:

  • Current and potential supplies are 3.7 to 5.4 times higher than ICAO’s February 2019 demand forecast.
  • Current and potential supplies are between 2 and 4 times higher than demand estimated in the International Air Transport Association’s (IATA) latest coronavirus (COVID-19) scenarios.
  • The total pipeline of programs that have applied for recognition under CORSIA is exponentially larger than demand being generated in the pilot phase. Any effort to relax eligibility criteria beyond the current reported recommendation would swamp the market.

“Limiting eligibility to only post-2020 projects would inject significant uncertainty into the market. On the other hand, an eligibility period of 2013-2020 would allow in nearly a billion tons of credits from the CDM alone – six to ten times airlines’ foreseeable demand,” said Stephen Donofrio, Director of Ecosystem Marketplace.

“A lot of people began developing projects in 2016 explicitly because CORSIA was announced that year,” said Ecosystem Marketplace Managing Editor Steve Zwick, who authored the brief. “I’m not sure if that’s part of the reasoning, but it makes intuitive sense, and an eligibility period of 2016-2020 seems to hit the sweet spot on demand relative to supply.”

There has also been speculation as to whether there is enough supply in the reported 2016-2020 vintage period to meet expected demand if reductions in air traffic associated with the coronavirus (COVID-19) outbreak dampen the 2019-2020 baseline and thus increase offset obligations significantly if air traffic rebounds in the 2021-2023 period. The analysis by Ecosystem Marketplace shows that there is more than adequate supply, even in this scenario.

“Ecosystem Marketplace analysis shows that voluntary carbon markets are thriving; there is plenty of supply both inside and outside the universe of credits suitable for CORSIA,” said Patrick Maguire, Senior Program Manager at Ecosystem Marketplace. “This new data highlights the increasingly strong intersection between voluntary supply and compliance markets, and underscores that ICAO’s decisions will heavily influence market supply, demand, and price.”

“International air travel is expected to almost double between 2016 and 2035. CORSIA is meant to decouple that growth from new emissions by putting a price on carbon for airlines,” said Michael Jenkins, CEO and Founding President of Forest Trends, Ecosystem Marketplace’s parent organization. “CORSIA can also be a leading example of global cooperation, showing us all how to pursue carbon-neutral growth across a global industry.”

The analysis is available for download at


Ecosystem Marketplace, a project of Forest Trends, is a web-based information platform that publishes newsletters, breaking news, original feature articles and major reports about market-based approaches to conserving ecosystem services.  EM believes that transparency is a hallmark of robust markets and that by providing freely accessible information, we can facilitate transactions (thereby lowering transaction costs), but also catalyze new thinking and spur the development of new markets and the infrastructure that supports them. Eventually these markets will grow and become a fundamental part of our economic system, resulting in sustainable supplies of ecosystem services, without which we cannot survive.

For an in-depth look at a wide range of carbon offset programs, see our report, “Financing Emissions Reductions for the Future – State of Voluntary Carbon Markets 2019.”