Shortage of Eligible Carbon Credits Raises Compliance Risks for Global Airlines

The Carbon Offsetting and Reduction Scheme for International Aviation, known as CORSIA, is due to enter its second phase in January 2027. The scheme, administered by the International Civil Aviation Organization, requires participating airlines to offset a portion of emissions growth on qualifying international routes through eligible emissions units.

S&P Global Energy reported in October that only about 29 million credits from projects supplying the first phase were also aligned with the eligibility criteria for the 2027–2029 period. That compares with estimated demand of about 1.2 billion tonnes of carbon-dioxide equivalent for the second phase, according to S&P Global Energy Horizons.

The supply constraint reflects differences between the standards accepted in the scheme’s initial phase and the more demanding requirements for credits eligible in the next period. Some household-device projects, including cookstove and water-purifier programmes, have issued credits using methodologies that will not qualify under the revised rules.

Developers are working to update project methodologies and secure eligibility, but the process takes time. Some suppliers expect new credits to become available during 2027, while others anticipate that their projects will not qualify until 2028 or later. This creates a timing risk for airlines and other participants preparing to meet future obligations.

The International Air Transport Association has separately estimated that airlines could need to purchase and cancel more than 200 million eligible emissions units by January 2028 for the first compliance cycle covering 2024–2026. It said that, as of August 2026, 72 million units were covered by compatible host-country authorisations, leaving a substantial supply gap.

A shortage of qualifying units could increase competition for available credits and raise compliance costs. Airlines may also face greater uncertainty when budgeting for emissions obligations, particularly if credit prices rise or authorisation processes are delayed.

The challenge is not simply to increase the volume of carbon credits, but to ensure that units meet the scheme’s environmental integrity and eligibility requirements. For the aviation sector, the transition will test whether carbon markets can deliver sufficient verified supply as international emissions rules become more demanding.