CORSIA Carbon Credit Supply May Meet Just 25% of Airline Demand

Airlines could face a major shortage of eligible carbon credits under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), with available supply potentially covering no more than 25% of demand for its first compliance period. According to a Reuters investigation published on 10 November 2026, the scheme could require credits covering up to 200 million tonnes of CO2 emissions, while only 11 countries are currently positioned to supply eligible units. Airlines participating in the 2024–2026 compliance period must purchase and cancel the required credits by 31 January 2028 or face potential penalties.

The shortage threatens to increase compliance costs for airlines while limiting climate finance flowing to developing countries through carbon markets. Consultancy Roland Berger estimates that carbon credit prices of $20 to $50 per tonne could result in industry-wide compliance costs of $3.6 billion to $9 billion, equivalent to approximately 5% to 12% of projected airline profits for 2026. The issue has emerged during COP31 in Antalya, Türkiye, where international carbon markets and climate finance are under discussion.

 

Carbon Credit Supply Falls Short of Aviation Demand

 

CORSIA, administered by the International Civil Aviation Organization (ICAO), requires covered airlines to offset growth in international aviation emissions above an established baseline. Approximately 130 countries participate in its first phase, running from 2024 through 2026. Although airlines have been monitoring and reporting emissions for several years, the approaching credit-cancellation deadline will test whether enough eligible carbon offsets are available.

The shortage reflects strict eligibility requirements designed to ensure that carbon credits represent credible emissions reductions and prevent double counting. According to Hannah Hauman at commodity trading company Trafigura, only around 5% of historical carbon credit inventories qualify for mandatory programs such as CORSIA. Limited eligible supply and delays in project approvals have created uncertainty for airlines preparing to meet their obligations.

 

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Airlines Face Rising Carbon Credit Prices and Compliance Risks

 

Eligible CORSIA carbon credits were trading at approximately $12 to $13 per tonne when Reuters published its investigation. However, analysts expect prices could rise as airlines approach the January 2028 deadline and compete for limited supplies. The United Kingdom has proposed a £ 100-per-tonne penalty for non-compliance, while other participating countries are developing their enforcement arrangements.

A Reuters review of disclosures from 10 major airline groups found limited transparency regarding expected CORSIA obligations and the volume of credits already secured. United Airlines acknowledged constrained availability, while American Airlines cited uncertainty around supply and pricing. Singapore Airlines confirmed that it had started securing eligible credits without disclosing quantities, while Air France-KLM reported that it had not yet purchased any.

 

Government Approvals Delay Carbon Credit Availability

 

A major obstacle is the requirement for carbon credits to meet ICAO eligibility standards and receive authorization from their host governments. Countries must ensure that emissions reductions transferred internationally are not also counted towards their own national climate commitments. This creates additional administrative requirements for governments and project developers seeking access to the aviation carbon market.

Brazil, potentially a major supplier of forest carbon credits, has not yet begun authorizing CORSIA projects and is finalizing its regulatory framework. Japan has also identified administrative capacity constraints affecting approvals in potential supplier countries. These delays are limiting credit availability despite growing demand from international airlines.

 

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Carbon Project Delays Affect Developing Countries

 

The supply shortage is also affecting carbon project developers that depend on international aviation offsets to finance emissions reduction activities. Zimbabwe-based clean cooking project developer Cicada had potential buyers for about one million credits, but its projects have not received CORSIA eligibility after technical concerns were raised during ICAO's assessment process.

The delays have affected commercial arrangements and the distribution of cleaner cooking technologies to households. Cicada may need to sell credits through voluntary carbon markets, where prices are generally lower. The case illustrates how certification and government authorization delays can affect both project financing and intended community benefits.

 

2028 Deadline Will Test Global Aviation Carbon Market

 

ICAO maintains that CORSIA implementation is progressing on schedule and says it is supporting governments in accelerating the availability of eligible credits. However, the gap between projected demand and available supply raises questions about whether airlines can meet their obligations without substantial price increases or compliance difficulties.

Walton Webson, Antigua and Barbuda's Ambassador to the United Nations, told Reuters, "This is going to be a true test of if we could make real progress."

The next stage will depend on faster government authorizations, expanded issuance of eligible carbon credits and clearer national enforcement rules. For airlines, securing sufficient credits before January 2028 will be a major test of CORSIA's ability to support emissions mitigation while directing carbon finance towards eligible projects.