Vietnam officially commits to joining CORSIA from 2026

The Civil Aviation Authority of Vietnam has officially committed to participating in the Carbon Offsetting and Reduction Scheme for International Aviation from Jan. 1, 2026, according to a Vietnamese government statement released on July 2.

CORSIA is a global mechanism for reducing and offsetting carbon emissions from international flights, backed by the UN's International Civil Aviation Organization. Under CORSIA's framework, airlines need to offset any growth in CO2 emissions above 85% of 2019 levels. As such, this mechanism has been widely seen as a key stimulus of carbon credit demand.

ICAO's statistics showed that the scheme has already covered about 60% of total international aviation CO2 emissions. However, some large developing countries, like China, India and Brazil, have not yet committed to joining CORSIA. Vietnam's latest announcement sent an encouraging signal to indicate a higher level of readiness of developing countries.

The Vietnamese government said this move also marks a significant stride in the green transition roadmap for Vietnam's aviation sector, while also posing a considerable challenge for domestic airlines, according to the statement.

The ICAO on June 30 confirmed the registration of CAAV, an agency under Vietnam's Ministry of Construction, to participate in the voluntary phase of CORSIA commencing from Jan. 1, 2026, the Vietnamese government statement said.

CAAV SAID Vietnam has undertaken numerous preparatory steps for participation. The construction ministry has issued a circular regulating the management of fuel consumption and CO2 emissions in civil aviation activities. CAAV has also implemented a monitoring-reporting-verification system for airline emissions and submitted international emissions data reports to ICAO for 2019-2024, the statement said.

In addition, CAAV has studied policies related to sustainable development from ICAO and the EU and organized various meetings with stakeholders to assess impacts and develop appropriate solutions for the CORSIA participation, according to the statement.

Financial impacts

However, CAAV warned that domestic airlines will face significant financial pressure due to the CORSIA participation. It is projected that the cost of purchasing carbon credits during the voluntary phase could range from $13 million to $92 million, depending on the market price of credits, which vary between $6 and $40/mtCO2e.

"This is a substantial figure, especially as many Vietnamese airlines are recovering post-pandemic and facing intense competition," the government statement said.

The CORSIA mechanism is structured in three main phases.

The Pilot Phase (2021-2023) applies to states that choose to participate voluntarily, followed by Phase 1 (2024-2026), which also remains voluntary. Phase 2 (2027-2035), however, becomes mandatory for states whose international aviation activities accounted for more than 0.5% of global revenue ton-kilometers based on 2018 data.

Least Developed Countries, Small Island Developing States, and Landlocked Developing Countries are exempt from this obligation unless they choose to participate voluntarily, according to ICAO.

CAAV will continue to coordinate closely with the airlines and relevant agencies in the future to standardize policy proposals and deliver financial and technical support mechanisms, helping aviation enterprises effectively adapt to CORSIA's new requirements, the statement said.

Binh Son Refining and Petrochemical Joint Stock Company, operator of the 130,000 b/d refinery at Dung Quat, in March signed a consulting contract with Kellogg Brown & Root for a pre-feasibility study on sustainable aviation fuel. The contract will grant BSR access to advanced technologies and technical solutions for energy transition and carbon emission reduction while also creating opportunities to facilitate its investments in new energy and sustainable aviation projects.

National carrier Vietnam Airlines successfully conducted the first flight using SAF from Singapore to Hanoi on May 27, 2024, the government said in a statement in May last year.

Platts, part of S&P Global Energy, assessed CORSIA-eligible carbon credits at $21.85/mtCO2e on July 2, up 86% year over year.