The readers of this blog probably have at least heard of these terms: CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), by the International Civil Aviation Organization (ICAO), the “Net Zero Framework” by the International Maritime Association (IMO). In brief, ICAO is the UN organization with, inter alia, a long-term goal of achieving net-zero carbon emissions from international aviation by 2050. Use of carbon offsetting through CORSIA is one of its key objectives. Generally, under CORSIA, if an airline’s emissions from international aviation exceed a baseline, the airline must compensate for some of those emissions by purchasing eligible carbon credits (offsets) or by using other approved emissions-reduction measures. IMO is the shipping equivalent of ICAO and serves as the global net-zero framework setter for maritime transport.
A few months ago, the carbon offsetting concept was rejected by the IMO delegates, allegedly at the insistence of the US State Department and Saudi Arabia. Soon, ICAO will host its member parties for what will include a discussion on continuing or amending the CORSIA program, currently in effect for 10 years. Now, there may be a reversal of roles. A critical issue being pressed by EU interests is to make Article 6 of the Paris Agreement—which creates mechanisms for countries to cooperate on emissions reductions and carbon markets—into the ONLY qualifying route to CORSIA eligibility. So, the Trump withdrawal from Paris would preclude the US credits from being used in CORSIA. And that is the intent.
If adopted, that could undo the CORSIA arrangement. That arrangement was based upon the availability of quality offset credits and a market by which airlines could acquire such credits. At the time, most of those quality offset credits were voluntary and had been created by one of the three principal voluntary registries in the US.
Recall that ICAO created CORSIA even before the Paris Agreement. The Paris Agreement focused on Nationally Determined Contributions, so by definition, it did not apply to the scope of CORSIA—which addressed international emissions from international air travel. ICAO has proceeded to review and accept some but not all of the voluntary reductions in carbon emissions established by several standard setting organizations. The three principal voluntary registries in the US had most of their voluntary programs accepted by ICAO. But the crediting programs required by California and Washington State were excluded. And after the Article 6 rules were adopted, many more projects began seeking to use the Article 6 international trading rules. Progress has been understandably slow and very few transactions have been completed. Indeed, an effort by Singapore to create a model agreement is still not complete, over a year after it began. While Article 6 holds great promise, few credits will be available pursuant to Article 6 rules in time for the first phase of the CORSIA compliance template.
European interests are now advocating for CORSIA eligibility to be limited exclusively to carbon credits generated under Article 6 of the Paris Agreement. They are seeking to capitalize on the Trump administration’s withdrawal of the US from the Paris Agreement by arguing that US-based credits should be excluded because they would no longer be able to obtain the required “letters of authorization” (LOAs) from the US government. As a result, carbon credits from American programs that were previously recognized as CORSIA-eligible could become ineligible even for use by US airlines.
Several differences exist between the rejected IMO “Net Zero” program and the US maintaining eligibility of US-sourced credits in the CORSIA program of ICAO.
- Without the US voluntary credits there is likely a shortfall for the first phase of the CORSIA program. US-based voluntary credits do not need any federal government approval since they are voluntary and must be shown to be such before being issued.
- International airlines supported the adoption of CORSIA to avoid precisely what is happening—a “patchwork of requirements” around the world. The example made by the US-based voluntary credit market created enough credits to justify the CORSIA being first created. This also shows the quality of the US-based voluntary credits.
- CORSIA is not a new program—its credits are easily purchased without a significant country-to-country negotiation process such as Article 6 requires.
- CORSIA is a trading program, and unlike the IMO project, does not create funds for other purposes. CORSIA is already a functioning market with registries having adopted measures to track the credits and prevent double counting.
American based credits do not need LOAs, and in fact have to provide evidence they are completely voluntary. LOAs are needed for locations that do not have clear title systems (such as real estate title) and where the possibility of multiple claimants is very large. Also, the so-called “Jurisdictional” REDD programs (Reducing Emissions from Deforestation and Forest Degradation), a common approach for “nature-based projects”, require a sharing of revenues among various parties, including federal and local governments. So, an LOA is needed for Article 6 transactions—country to country. But such makes no sense for an established market such as the US registries that require evidence of ownership of the environmental attributes before a credit is even issued.
Since this blog was begun, a further shift has occurred in the EU stance—for the applicability of air routes regulated by CORSIA. While this new position raises another issue to be resolved, it should not be a distraction from the fundamental issue that ICAO approved certain voluntary methodologies, adopted and implemented by the US registries, and those credits should be eligible for use in the first phase of CORSIA: Those voluntary credits are the exemplars of voluntary credits today and fill a key aspect of the CORSIA demand.
Only 32 million credits are expected to be available in the first quarter of 2026, compared with an estimated 146 million credits of demand, leaving a substantial supply shortfall. The exclusion of US based credits from the initial phase removes about 80 million credits from the pool of eligible supply—credits that could significantly help meet demand during the first phase of CORSIA. That demand is expected to increase as the scope of the CORSIA requirement increases after 2027. Given this supply-demand imbalance, ICAO should be focused on increasing, not restricting, the availability of eligible credits. Allowing the use of Article 6 credits is a sensible step toward expanding supply. But ICAO should not simultaneously eliminate other eligible US-based credits. At a minimum, these credits should remain available to US airlines and ideally they should be available to all international airlines participating in CORSIA.
Allowing US credits to be purchased, if only by US airlines, will advance the ICAO program and the cause of climate stewardship as well as US sustainable business conduct.
