CORSIA Under Pressure: Why Airline Carbon Offsetting Is Hitting a Political and Supply Bottleneck

What IATA Is Warning About and Why the Timing Matters

IATA is warning that international aviation emissions could rise from just above 600 Mt in 2019 to nearly 900 Mt by 2035 if CORSIA were not in place. That matters because this is no longer just a policy debate. It is a market-sizing issue for buyers, compliance teams, and finance leaders.

The timing is tight. IATA estimates airlines will need to buy about 200 million CORSIA eligible emissions units by January 2028, with a total cost in the range of USD 4 to 5 billion. That puts procurement planning, contract structure, and inventory visibility at the center of the discussion.

The first reporting deadline for cancellation of units is 30 April 2025. That means the window to secure supply is already narrow, especially for airlines that still need to build their compliance pipeline.

The core issue is not offsetting in the abstract. It is liquidity in a compliant market. If eligible credits cannot be issued and delivered in time, airlines can end up with a regulatory obligation and no qualified inventory to meet it.

That is why the real bottleneck is not demand. It is the chain of approvals, registry rules, and government backing that turns a carbon credit into a CORSIA-usable unit.

How CORSIA Depends on Host-Country Authorizations and Government Backing

CORSIA depends on host-country authorization because credits must be approved by the country where the emissions reduction happened. That is what helps avoid double counting between airline use and the host country’s national climate accounting.

ICAO treats host-country attestation and authorization as a key safeguard against double claiming under Article 6 of the Paris Agreement. For vintages from 2021 onward, there are specific authorization requirements.

In 2025, ICAO also published a standardized template for host-country authorization. That is a sign the process is becoming more formal, but it also shows how sensitive and administrative it remains.

Guyana is a useful example of what a bankable pathway can look like. The government authorized 4.64 million CORSIA-eligible units under ART, making them available to airlines for the 2024 to 2026 period.

For buyers and developers, the point is practical. A credit can exist in a registry and still not be spendable for airline compliance if the government approval is missing.

That is why the bottleneck is political as well as operational. The dependence on Letters of Authorization shifts risk into the supply chain itself, and that can limit the volume of eligible credits available at scale.

The Supply-Side Problem: Why Eligible Carbon Credits May Not Reach Airlines at Scale

CORSIA supply is not the same as generic carbon credit supply. ICAO publishes a list of eligible programs and vintages for the 2021 to 2023, 2024 to 2026, and 2027 to 2029 periods, but many voluntary market projects do not pass the filter.

Eligibility is also time-bound. Units must come from activities with a first crediting period that started in 2016 or later, with additional exclusions applying.

ICAO also says some programs are only conditionally eligible. That means the supply that is fully usable by airlines still depends on further technical and administrative conditions.

IATA notes that post-2020 credits often require extra documentation and can take time to release because of authorization rules, registry requirements, and double-claiming compensation rules.

For developers, this changes project design. A project needs to be CORSIA-ready from the start, with the methodology, registry pathway, host-country process, and buyer acceptance aligned before issuance.

If supply stays fragmented and slow, the impact goes beyond aviation. It can affect prices, project finance, and confidence in national climate policy. That is where the pressure starts to spill into the wider market.

What a Weak CORSIA Means for Airlines, Credit Developers, and National Climate Policy

For airlines, a weak CORSIA means more volatile compliance costs, more complex procurement, and a higher chance of last-minute buying. That is a bad setup for any market that needs predictable delivery.

For credit developers, demand from airlines may be large, but it is highly selective. Without state authorization and ICAO eligibility, the asset is not immediately monetizable in the aviation compliance channel.

For governments, the issue is strategic. Authorizing credits for CORSIA can bring international demand and foreign currency, but it also requires discipline under Article 6 and consistency with the national NDC.

A weak or politically blocked CORSIA can also slow carbon project finance. If buyers cannot see reliable offtake, future cash flows become harder to underwrite.

In practice, the market can split between countries that authorize quickly and countries that wait. That affects where supply comes from and how credits are priced.

The question then becomes simple. Can CORSIA still stabilize through clearer policy, stronger host-country engagement, and more supply, or does it need a different architecture?

Can CORSIA Still Recover? The Scenarios That Could Stabilize the Program

A stabilization scenario starts with ICAO tightening and clarifying the process. The 2025 reassessment of eligible programs for 2027 to 2029 shows the architecture is still being calibrated, not frozen.

A second driver is wider use of templates and guidance for host-country authorization. That would reduce delays, legal ambiguity, and diplomatic friction between registries, governments, and buyers.

A third scenario is more supply from programs already recognized, including those with larger potential volumes such as ART or other schemes backed by sovereign authorization. That would give airlines a more predictable pipeline.

On the B2B side, stability will also depend on more sophisticated procurement structures. Forward offtake, pre-authorized vintages, and contracts with clear clauses on corresponding adjustments and delivery risk all matter.

If these elements come together, CORSIA can still function as a credible compliance market. If they do not, it risks becoming a system that is sound on paper but underfed in practice.