Presidential pardon for airlines undermines CORSIA

CORSIA compliance rules unchanged despite speculation

Recent headlines have suggested major changes to airline carbon offset obligations. However, the core requirements remain in place. Airlines operating international routes must still comply with the Carbon Offsetting and Reduction Scheme for International Aviation.

The scheme continues to require participating carriers to offset emissions growth above 2019 baseline levels. For many UK businesses that rely on air freight or regular international travel, understanding these obligations matters. Supply chain costs and business travel budgets both reflect the ongoing compliance burden that airlines face.

CORSIA entered its first compliance phase in January 2024. Airlines from participating states now monitor their emissions and purchase carbon credits to cover growth. The scheme applies to flights between participating countries, creating a complex web of obligations that varies by route and operator.

For SMEs, this translates into freight costs that include carbon offset expenses. It also means corporate travel policies need to account for the environmental reporting requirements that larger clients increasingly demand. Many public sector tenders now ask suppliers to demonstrate their approach to business travel emissions.

How the offset scheme currently operates

CORSIA Phase 1 runs from 2024 through 2026. Airlines calculate their emissions against an 85 percent threshold based on 2019 levels. When their emissions exceed this baseline, they must purchase eligible carbon credits to cover the difference.

The scheme recognizes specific types of carbon credits as Eligible Emissions Units. These include projects verified under standards like the Gold Standard and Verra’s Verified Carbon Standard. Airlines purchase credits from project developers, then retire them to demonstrate compliance.

In practical terms, this means carriers are actively buying carbon offsets. Japan Airlines recently retired 180,000 Gold Standard credits through Shell Trading, demonstrating the scale of transactions taking place. These purchases represent real costs that flow through to freight rates and passenger fares.

The compliance deadline for Phase 1 falls in January 2028. Airlines must cancel their required credits by this date to meet their obligations for the 2024-2026 period. Consequently, procurement of carbon offsets is happening now, not in some distant future.

Market analysts project substantial demand for carbon credits. Estimates suggest airlines will need approximately 78 million additional tonnes of offsets in 2026 alone. This demand affects carbon credit prices, which in turn influences the cost of air transport.

Phase 2 brings expanded coverage and higher obligations

The scheme intensifies from 2027 onwards. Phase 2 maintains the offset requirement but calculates obligations differently. Airlines will need to cover 100 percent of emissions growth above 2019 levels, removing the 85 percent threshold used in Phase 1.

Furthermore, more countries may join the scheme during Phase 2. Each new participant brings additional routes under CORSIA coverage. The International Civil Aviation Organization continues to encourage broader participation, particularly from major aviation markets.

For businesses, Phase 2 likely means higher air freight costs. Airlines will need more carbon credits to meet stricter obligations. Those costs will appear in shipping rates and fuel surcharges. Companies that ship time-sensitive products by air should factor these increases into their financial planning.

The scheme also creates reporting requirements for airlines. Carriers must verify their emissions through approved verification bodies. They document their credit purchases and retirements. This administrative burden adds to operational costs, though it provides transparency for stakeholders.

What this means for UK businesses and supply chains

Air freight remains essential for many sectors. Electronics, pharmaceuticals, fashion, and perishable goods often move by air due to speed requirements. CORSIA compliance costs affect all these shipments.

Freight forwarders are already building offset costs into their pricing. Some offer customers visibility into the carbon credit component of shipping fees. Others absorb the costs within general rate structures. Either way, the expense exists and influences total supply chain costs.

Business travel represents another affected area. Companies with significant international travel now see those costs include an offset element. For organizations pursuing carbon reduction commitments, understanding which airlines comply with CORSIA and how they source their credits matters.

Public sector suppliers face particular scrutiny. Procurement Policy Note 06/21 requires suppliers bidding for major government contracts to demonstrate their carbon reduction plans. Travel emissions form part of this calculation. Businesses need to show they understand their travel footprint and how their chosen carriers address offset obligations.

Additionally, many large private sector clients now request similar information. Corporate sustainability reporting increasingly includes Scope 3 emissions, which cover business travel. Suppliers that can articulate their approach to travel emissions and demonstrate awareness of carrier compliance gain an advantage.

Essential facts about airline carbon offset requirements

• CORSIA Phase 1 runs from January 2024 through December 2026, requiring airlines to offset emissions growth above 85 percent of 2019 levels.
• Airlines must retire Eligible Emissions Units by January 2028 to demonstrate compliance for Phase 1.
• Phase 2 begins in January 2027 and requires airlines to offset 100 percent of emissions growth above 2019 baselines.
• Market projections estimate airlines will need approximately 78 million tonnes of carbon offsets in 2026 to meet their obligations.
• The scheme applies to international flights between participating countries, creating route-specific obligations for carriers.
• Only specific carbon credit types qualify as Eligible Emissions Units, including projects verified under Gold Standard and Verified Carbon Standard.
• Airlines face verification requirements and must document their emissions monitoring and credit retirement through approved bodies.

Planning for continued offset costs in freight and travel

Businesses should treat CORSIA compliance costs as a permanent feature of air transport pricing. The scheme will continue beyond Phase 2, with the International Civil Aviation Organization reviewing and potentially strengthening requirements.

Financial planning should account for rising offset costs. Carbon credit prices fluctuate based on supply and demand. As more airlines compete for eligible credits, prices may increase. Companies that rely heavily on air freight need to model these potential cost rises.

Some businesses are exploring alternatives to reduce exposure. Sea freight offers lower carbon intensity for non-urgent shipments. Rail connections continue to expand across Europe, providing options for continental transport. However, air freight remains necessary for many products, making cost management rather than elimination the realistic goal.

Travel policies warrant review as well. Video conferencing reduced business travel during recent years, and many companies maintained those reductions. Evaluating which trips genuinely require in-person attendance helps control both costs and emissions.

For businesses pursuing net-zero commitments, understanding travel emissions in detail becomes important. Our net-zero program for carbon reporting compliance helps companies measure and report their full emissions footprint, including business travel and freight transport.

Supplier selection may also reflect offset considerations. Some airlines invest in sustainable aviation fuel alongside purchasing carbon credits. Others focus purely on compliance through offset purchases. Businesses with strong sustainability commitments may prefer carriers that demonstrate broader decarbonization efforts.

Carbon reporting obligations intersect with transport choices

Many UK businesses now face mandatory or voluntary carbon reporting requirements. The streamlined energy and carbon reporting framework applies to large companies. However, smaller businesses often report emissions to meet client expectations or tender requirements.

Business travel and freight transport fall under Scope 3 emissions in reporting frameworks. These indirect emissions prove challenging to calculate accurately. Airlines provide varying levels of emissions data to corporate customers, complicating the reporting process.

Some carriers offer detailed emissions reporting for corporate accounts. They calculate flight-specific emissions based on aircraft type, load factors, and route. This data helps businesses complete their Scope 3 calculations with greater accuracy.

Without this support, companies must use average emissions factors. These provide reasonable estimates but lack the precision that detailed reporting demands. As reporting standards tighten, access to granular data becomes more valuable.

The compliance support we provide for ESG and carbon reporting includes guidance on calculating transport emissions. We help businesses gather the right data from carriers and freight forwarders, then incorporate those figures into their overall carbon footprint.

Supply chain emissions represent a significant portion of most companies’ Scope 3 footprint. Freight transport contributes substantially to this total. Consequently, understanding CORSIA and its cost implications helps businesses make informed decisions about shipping methods and carrier selection.

Monitoring developments in aviation carbon policy

The regulatory environment continues to develop. The International Civil Aviation Organization reviews CORSIA periodically and may strengthen requirements. Individual countries also implement their own aviation sustainability measures alongside the international scheme.

The UK Emissions Trading Scheme covers domestic flights and flights between the UK and European Economic Area. This creates overlapping obligations for some routes. Airlines must navigate both systems, adding complexity to their compliance efforts.

European Union regulations also affect UK businesses. The EU Emissions Trading System applies to flights within Europe and includes aviation in its cap-and-trade mechanism. Brexit created some gaps in coverage that both the UK and EU continue to address through policy development.

Sustainable aviation fuel mandates represent another policy area. The UK government has consulted on requiring a minimum percentage of sustainable fuel in aviation. If implemented, this would add another cost element to air transport, though it would reduce the need for carbon offsets.

Businesses should monitor these developments through authoritative sources. The Department for Transport publishes updates on UK aviation policy. The International Civil Aviation Organization CORSIA page provides information on the global scheme.

Trade associations also offer sector-specific guidance. The Freight Transport Association and similar bodies interpret policy changes for their members. They explain practical implications and help businesses prepare for regulatory shifts.

Where to find authoritative information on aviation offsets

Several organizations provide reliable information on CORSIA compliance and aviation carbon policy. The International Civil Aviation Organization maintains the definitive resource on the scheme, including technical details on eligible credits and verification processes.

The International Air Transport Association offers guidance from an airline industry perspective. Their materials explain how carriers implement the scheme and what it means for commercial aviation.

For carbon credit quality and verification, the Gold Standard and Verra websites detail the standards that projects must meet to generate Eligible Emissions Units. These resources help businesses understand what their air freight and travel offset costs actually support.

The Carbon Market Watch provides independent analysis of carbon offset markets, including aviation. Their research examines offset quality and policy effectiveness from a civil society perspective.

UK businesses should also consult the government’s greenhouse gas reporting conversion factors. These figures help companies calculate their travel and freight emissions for carbon reporting purposes, ensuring consistency with official methodologies.