CARBON EXPLAINED: CORSIA supply and demand lag behind phase transition

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The aviation sector’s flagship credit-based compliance carbon market is getting ready for a new phase – but so far it’s been a challenge to ensure reality meets ambition.

Starting January 1, 2027, nearly all international flights will be required to offset their emissions under Phase 2 of the CORSIA program. 

However, the supply of carbon credits needed to offset airlines’ emissions has been slow to ramp up, as has actual demand for these credits from airlines. Combine that with regulatory uncertainty and you get some turbulent price swings.

Platts assessments showed Phase 1 credits hitting lows of $9.45/mtCO2e in July before rebounding to $12.85/mtCO2e later that month. 

Platts will start publishing Phase 2 CORSIA price assessments in November, while continuing Phase 1 assessments until the retirement deadline in 2028.

Given eligible supply really only started coming online in earnest this year, it looks like trade of phase 1 credits will continue well into next year.