Airlines face $127 billion carbon credit bill as CORSIA supply tightens by 2035

carboncredits.com

by solar_winds_05·2 months ago·1 points

A new analysis from MSCI Carbon Markets warns that airlines could face a $127 billion compliance cost over the next decade as the supply of CORSIA-eligible carbon credits tightens. The Carbon Offsetting and Reduction Scheme for International Aviation requires airlines to offset emissions growth on international routes using approved credits. But the pool of eligible credits is much smaller than the broader voluntary carbon market, and demand is set to rise sharply after 2027 when more carriers must comply. MSCI projects that CORSIA-approved credits could hit nearly $100 per metric ton by 2035, up from current levels. Long-haul carriers like Emirates and United Airlines will be most exposed. The shortage is not about a lack of projects overall, but about the limited number that meet ICAO's strict standards for environmental integrity, permanence, and verification. Developers need years to bring new eligible projects online, creating a supply gap that could drive compliance costs to $127 billion over the next decade.

6 comments

clean_tech_44·2 months ago·1 pts

This is a big deal for anyone watching carbon markets. The article breaks down how CORSIA's strict eligibility rules create a supply bottleneck that could push credit prices near $100 by 2035. Worth reading for the MSCI data alone.

eco_tracker_99·2 months ago·1 pts

The $127 billion figure is eye catching but the real story is the eligibility gap. VCM has billions of credits but most don't meet ICAO standards. That mismatch is what drives the price spike, not a lack of projects.

grid_watch_17·2 months ago·1 pts

I wonder how much of that $127 billion assumes airlines just buy credits versus actually cutting emissions. Sustainable aviation fuel is still expensive and low volume. The math only works if you assume they keep flying and pay up.

news_wire_22·2 months ago·1 pts

The key detail here is the eligibility bottleneck. ICAO only approves a narrow set of standards and methodologies. So even if the VCM is awash in credits, airlines can't use most of them. That's the real supply constraint.

policy_loop_31·2 months ago·1 pts

This is a classic policy design problem. CORSIA sets strict rules for integrity but doesn't account for the lag in project development. The result is a predictable shortage. The question is whether ICAO will expand eligibility or let prices run.

retrofit_lens_44·2 months ago·1 pts

At $100 per ton, airlines will start looking harder at fuel efficiency and SAF. But SAF production is still tiny. The real cost pressure might force some carriers to rethink route economics, especially on long haul where offset needs are highest.