Can IATA’s New CORSIA Coalition Unlock the Aviation Carbon Offset Market?

Why aviation carbon markets are still stuck despite rising demand

The aviation offset market is not stuck because demand is weak. It is stuck because supply is not ready.

For the first CORSIA period, 2024 to 2026, ICAO has approved only a limited set of eligible programmes, while IATA says compliance demand could run into tens of millions of tonnes of units. That is a classic mismatch between demand and supply in carbon procurement.

For B2B buyers, the problem is not just volume. It is fragmentation. Different standards, different registries, CORSIA eligibility rules, and authorization requirements to avoid double counting all raise due diligence and transaction costs.

Liquidity is still thin because this market does not yet behave like a true commodity market. Deals are often bilateral, price discovery is opaque, and airline buyers are not buying on the same timetable as project issuance.

The macro backdrop also matters. IATA has said airlines face margin pressure and CORSIA compliance costs, while fuel markets are more liquid and easier to hedge than offsets. That helps explain why many operators delay credit purchases.

The key question is whether an IATA-led coalition can reduce supply frictions, aggregate demand, and create more reliable price signals. That is where liquidity, pricing, and market access come in.

What the coalition could change for liquidity, pricing, and market access

The new Supporting Alliance for CORSIA EEU Supply is meant to increase supply by 225 to 250 million CORSIA Eligible Emissions Units by spring 2027. That sounds less like advocacy and more like market-making.

If the coalition can coordinate developers, registries, intermediaries, and airline buyers, it could narrow the gap between available supply and bankable demand. That would improve liquidity in a market still dominated by OTC deals and incomplete price signals.

For market participants, the practical gain would be a more standard procurement stack. That means a clearer pipeline, easier benchmark pricing, and lower sourcing costs for portfolio managers, brokers, and compliance desks.

Market access matters most for projects outside the most established channels. An IATA-backed coalition can act as a reputational filter, helping institutional buyers separate eligible credits, conditionally eligible credits, and credits that are not suitable for aviation compliance.

The real test, though, is unit quality. More liquidity only helps if the units are actually fit for CORSIA. Without clarity on eligibility, vintages, and authorization status, the market could simply trade more volume without allocating capital better.

The CORSIA quality question: which credits are most likely to benefit

ICAO keeps an official list of programmes eligible for CORSIA, with differences across the pilot phase, the first phase 2024 to 2026, and the second phase 2027 to 2029. So the credits most likely to benefit are the ones already aligned with CORSIA rules or close to full eligibility.

In practice, B2B demand will move toward credits with a strong integrity signal. That means recognized standards, solid MRV, compatible vintage, and, where required, corresponding adjustments to avoid double counting in international markets.

The projects most likely to capture aviation demand are usually the ones with clear compliance structure and scalable supply. That often includes nature-based projects with strong governance, programmes already approved by ICAO, and in some cases credits from schemes with a history of corporate acceptance.

For buyers, the filter will not be only carbon removal versus reduction. It will be the mix of CORSIA eligibility, regulatory risk, audit trail, and whether retirement or cancellation can be done in line with ICAO requirements. That is what separates bankable credits from speculative ones.

Once the winning credit classes are clear, the operational impact shifts to the supply chain. Developers who can adapt project design, registry setup, and documentation quickly will have an edge. That leads to the route to market.

How project developers could gain faster routes to market

Project developers with CORSIA-eligible credits can shorten time to revenue if they build a compliance-ready pipeline from the start. That means a compatible methodology, registration under eligible programmes, proper documentation, and strict management of the vintaging window.

The new environment rewards units that are ready for cancellation. Airline buyers want to avoid assets that need extra regulatory remediation or post-issuance adjustments.

For developers, an IATA coalition could lower market access costs if it creates more predictable deal flow, more uniform offtake terms, and better visibility on aggregated carrier demand. In B2B terms, that supports forward contracts and pre-buy agreements.

The best-positioned projects will be the ones that can show eligibility by design. Monitoring, reporting, verification, and alignment with ICAO and CORSIA documents need to be built into project structuring, not added after issuance.

The speed-up will not be even across the market. Some projects will move faster, while others will stay constrained by national authorizations, data gaps, or uncertainty about their place in the second phase. That leaves the final question: what procurement path will airlines follow in the near and medium term?

Short-term signals and medium-term scenarios for airline carbon procurement

The strongest short-term signal is IATA’s action at its June 2026 AGM. The coalition is trying to mobilize the ecosystem before CORSIA demand intensifies, which points to market preparation rather than full maturity.

Airline procurement teams will likely split into two speeds. Some will buy spot or short-dated units for immediate needs. Others will sign multi-year contracts to secure supply from programmes that are already eligible, especially where regulatory visibility is higher.

A base-case scenario is gradual price normalization for CORSIA-grade credits if the coalition brings meaningful volumes to market by 2027. A more bullish scenario is a significant premium for credits with scarce supply and high integrity.

For buyers and market intermediaries, the key metric is not only price per tonne. It is deliverability. How many credits can actually be cancelled, when can they be delivered, and what is the risk of regulatory revision or eligibility downgrade?

Over the medium term, aviation procurement could move toward a mix of CORSIA offsets, lower-carbon aviation fuels, and hybrid portfolios. Offsets would serve compliance, while the other tools would support climate strategy and reputation. That will decide whether the coalition truly unlocks the market or only improves its structure for a while.