(Bloomberg) -- A lack of clarity over carbon credits that airlines can buy to meet their emissions obligations under a global offsetting scheme is causing confusion, according to Trafigura Group.
There has been “a lot of discussion, a lot of confusion,” over the Carbon Offsetting and Reduction Scheme for International Aviation, or Corsia, said Hannah Hauman, global head of carbon trading at the Singapore-based commodities firm.
Airlines from about 130 countries, representing more than 90% of international airline emissions, have joined the first voluntary phase of Corsia from 2024 to 2026. Corsia is a United Nations initiative compelling airlines to monitor and report their emissions while buying carbon credits to offset them.
“The demand clock has already begun ticking,” Hauman said Wednesday at APPEC 2024, a conference hosted by S&P Global Commodity Insights in Singapore. “But the reality is, we do not actually see clarity on what the supply side of the market looks like.”
Aviation is one of the heaviest-emitting industries, and among the most difficult to decarbonize. While the first phase of Corsia is voluntary for states, compliance becomes mandatory from 2027.
Concerns are growing over a potential supply crunch. Airlines may scramble to find Corsia-eligible credits as the International Civil Aviation Organization has so far failed to fully approve the use of credits from the world’s major registries, Verra and Gold Standard.
Still, the “first transactions are already happening,” said Hauman. “Negotiations are absolutely ongoing” with test trades being completed.
Michael Evans, group sustainability insights manager at International Airlines Group, said at the same panel that his firm is trying to prepare for Corsia “as early as we possibly can.” However, lack of clarity around how requirements interact with existing carbon markets in Europe means heightened regulatory risk, he said.
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