The International Civil Aviation Organization’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) requires airlines to monitor and report their emissions, while also buying emission reduction units. The specified credits will have a significant impact on the voluntary carbon market and provide signals to the broader market on credits the ICAO considers “quality” and where larger purchases may take place in the future. The Technical Advisory Body (TAB) recently made recommendations for reassessing the standards that were eligible under the pilot phase to decide whether or not they would be eligible under CORSIA’s first phase. American Carbon Registry (ACR) and Architecture for REDD+ Transactions (ART) were both approved to supply credits for the first phase, while the Climate Action Reserve (CAR), Global Carbon Council (GCC), the Gold Standard, and Verra’s VCS program were only conditionally approved. The ICAO’s review and recommendations will have a significant influence on the market, driving up demand for the credits available under the approved standards as airlines will purchase them in large volumes. Additionally, it may signal to non-airline buyers that these are considered “best-in-class” and drive up demand from non-airline credit purchasers. Non-airline credit buyers that have structured a carbon strategy that includes CORSIA-eligible credit types should plan accordingly, adjusting budgetary expectations, communicating updates to stakeholders and procuring credits well in advance of true-up deadlines. Planning the purchase of quality non-CORSIA-eligible credits in portfolios can help buyers weather budgetary and availability impacts of CORSIA. Credit buyers should have discussions with their key stakeholders on how they view CORSIA and what it signals to the market about credit quality.
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