CORSIA explained: what the aviation carbon scheme is and what recent developments mean for the market

As global climate policy evolves, aviation remains one of the most complex sectors to decarbonize. While efficiency improvements and sustainable aviation fuel (SAF) will play a critical role over time, international aviation emissions continue to grow, and governments have long recognized the need for a near term mechanism to manage that growth.

Aviation accounts for about 2.5% of global carbon emissions annually, but when taking into account other impacts such as soot and aerosols, the warming effect is greater. That is where CORSIA comes in.

This article aims to help organizations understand what CORSIA is, how it works, and what the latest developments mean for airlines, project developers, and carbon market participants.

What is CORSIA?

CORSIA - the Carbon Offsetting and Reduction Scheme for International Aviation - is a global market-based mechanism developed by the International Civil Aviation Organization (ICAO), a UN body responsible for international aviation.

Its purpose is to address the growth in emissions from international flights, by requiring airlines to offset emissions above a defined baseline using CORSIA eligible carbon credits.

In simple terms:

• Airlines monitor and report their emissions from flights
• Sector emissions growth above a set baseline creates a CORSIA obligation
• Airlines meet that obligation by purchasing and retiring CORSIA eligible carbon credits

CORSIA is distinct from voluntary offsetting of emissions by an airline. It is a compliance framework, agreed by governments, and is the only global market-based scheme that applies to a sector.  ICAO’s intention is that CORSIA provides a level playing field for all international airlines reducing need to comply with a patchwork of regional carbon policies and trading schemes, such as the EU Emissions Trading System (EU ETS).

How CORSIA works in practice 

CORSIA is being implemented in phases:

• Pilot (2021-2023): Participation is voluntary for countries, though many major aviation markets opted in. As the COVID-19 pandemic caused a massive drop in aviation, which was still recovering through 2021 onwards, sector emissions were below the baseline, and no offsetting requirements were accrued in the pilot phase.
• Phase 1 (2024–2026): Phase 1 remains voluntary for nations to participate in, with 130 of the 193 member states enrolled. With a sector baseline of 85% of 2019 emissions, it is forecast that 150-200 million credits will be required to offset sector growth for Phase 1.
• Phase 2 (2027–2029): Participation becomes mandatory for phase 2, with nations including Russia, China, India and Brazil participating in CORSIA for the first time. Credit eligibility criteria will tighten for this phase.

A critical feature of CORSIA is that not all carbon credits qualify. ICAO has established detailed eligibility rules covering:

• Which standards are approved
• Which methodologies can be used
• How issues such as corresponding adjustments are handled

As a result, CORSIA supply is currently far more constrained than the wider carbon market and eligibility can change between phases, particularly as quality expectations evolve.

How CORSIA relates to Article 6 

CORSIA and Article 6 are closely linked:

• Article 6 governs international cooperation under the UNFCCC Paris Agreement, setting the rules for how countries transfer emission reductions (mitigation outcomes) between one another, and how emission reductions for other uses, including CORSIA, must be accounted for in national greenhouse gas (GHG) reports.

• CORSIA is a sector-specific mandatory offsetting scheme for international aviation, operating under the International Civil Aviation Organization (ICAO), and separately to the UNFCCC. CORSIA interacts with Article 6 because CORSIA credits need to be accounted for in national GHG reports.

For Phase 1 and all subsequent phases, CORSIA-eligible credits with a 2021+ vintage must be authorized by the host country for international use under Article 6. This authorization requires the host country to perform a Corresponding Adjustment (CA) to prevent "double counting" - ensuring the same reduction isn't claimed by both the country for its national targets and the airline for CORSIA.

Registries like Verra and Gold Standard allow credits to be labelled as "CORSIA-eligible" if they are backed by a Letter of Authorization and a risk management mechanism (such as insurance or a legal guarantee) to compensate if the host country fails to follow through on the adjustment.

For buyers, eligibility is no longer optional but strictly structured around these Article 6 accounting requirements.

What has changed over the past 12 months?

While CORSIA has existed for several years, the past year has been marked by incremental but important progress. At the same time, CORSIA has had to navigate several challenges, including a time of increased uncertainty.

Key developments include:

Greater clarity on Phase 2 eligibility for carbon projects - ICAO has tightened eligibility criteria in comparison to Phase 1, both in terms of approved standards and methodologies. This has implications for long-term project viability and investment decisions, particularly for supply that may be eligible today but not in future phases. 

Growing focus on perceived “quality” - Although CORSIA eligibility is not the same as quality benchmarks in the voluntary market, there are early signs of convergence with newer methodologies and updated approaches increasingly favoured. At the same time, market participants remain cautious about language that could inadvertently devalue existing projects that remain compliant, legitimate and high impact.

Uncertainty from policy and demand - Perhaps the biggest constraint on market activity remains uncertainty on the demand side:

• Not all countries have embedded penalties for non‑compliance into national law
• Major jurisdictions, including the EU, are still reviewing how CORSIA interacts with regional regulation, such as the EU ETS.
• Airlines face limited price signals and unclear incentives to act early

Recent milestone: the first largescale CORSIA credit retirement

Against this backdrop, new developments in March 2026 mark an important signal. According to Carbon Herald, a commercial airline has completed the first largescale retirement of CORSIA eligible carbon credits, with 180,000 Gold Standard credits retired by Shell on behalf of Japan Airlines, covering Phase 1 obligations.

The credits were sourced from clean cooking and biomass energy projects in Africa, highlighting the role of CORSIA in channelling finance into projects that deliver both emissions reductions and social impact.

Gold Standard described the transaction as a signal that CORSIA is beginning to move from policy design to real-world implementation, with further retirements expected as airlines prepare for the Phase 1 compliance deadline in January 2028.

While uncertainty remains, it is a clear signal that airlines are beginning to act.

How is the market feeling? 

Conversations across the market point to a mood of cautious pragmatism.

There is broad recognition that:

• CORSIA remains the largest potential source of compliance demand for carbon credits
• Significant technical and policy work has been completed
• Supply diversity and availability of eligible carbon credits is improving

At the same time, many airlines remain in “wait and see” mode, balancing CORSIA obligations against fuel price volatility, regulatory uncertainty and competing capital demands.

What needs to happen next?

Looking ahead, three factors will be critical to unlocking confidence and activity:

1. Clearer signals from governments, particularly on enforcement and penalties
2. Greater certainty on how CORSIA and regional systems interact, especially in the EU
3. Continued progress on high integrity carbon credit supply, aligned with evolving quality expectations

Until then, CORSIA is likely to continue advancing in measured steps, rather than rapid acceleration.

Why this matters for organizations today

CORSIA has moved beyond policy architecture and into early delivery, even if there is still a long way to go. The first largescale retirements, tighter Phase 2 criteria, and Article 6 authorization requirements are already influencing procurement decisions, despite a constrained pool of eligible supply.

At the same time, uncertainty remains material: how consistently governments will enforce obligations, how CORSIA will sit alongside other compliance schemes, and how eligibility and quality criteria will continue to evolve.

Airlines, project developers and other market participants that track these signals now-rather than waiting for the 2028 deadline - will be better placed to secure eligible supply, move quickly when demand firms up, and reduce compliance risk. Progress is real, but navigating CORSIA still calls for careful interpretation of ongoing developments and the foresight to plan around them.