Uzbekistan’s Role in Aviation Carbon Credits Amidst Looming Shortage

Uzbekistan enters international carbon markets with aviation credits

Uzbekistan has positioned itself as a supplier of carbon credits for the aviation sector. The country received its first payment for verified emissions reductions in June 2024. It has since created the legal framework needed to participate in international carbon markets. This matters because airlines need approved offsets to comply with global emissions rules, and supply is falling short of demand.

The development centres on three linked factors. First, Uzbekistan successfully monetised emissions cuts through a World Bank programme. Second, it adopted legislation in 2025 allowing international carbon market participation. Third, airlines operating international routes must buy approved carbon credits under CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation.

For UK businesses involved in aviation supply chains or international carbon markets, Uzbekistan represents a new source of compliance-grade offsets. However, the country’s carbon market infrastructure is still being built. Understanding what has been achieved so far and what remains under development helps assess the practical opportunities and risks.

World Bank payments mark verified emissions reductions

In June 2024, the World Bank confirmed that Uzbekistan became the first country to receive payment under a policy crediting programme. The country received a $7.5 million grant for verified reductions of 500,000 tonnes of carbon emissions. This payment came through the World Bank’s iCRAFT project, which supports energy subsidy reform and lower greenhouse gas emissions.

The iCRAFT programme operates with a $46.25 million grant. It aims to reduce 60 million tonnes of CO2 in total. Under the emissions reduction payment agreement, Uzbekistan could receive up to $20 million in grants as further reductions are verified and reported.

This initial payment demonstrates that Uzbekistan has functioning monitoring and verification systems. Those systems are essential for producing internationally tradable carbon assets. Without credible measurement and third-party verification, emissions reductions cannot be converted into credits that airlines or other buyers will accept.

The World Bank’s Transformative Carbon Asset Facility (TCAF) backs the payment mechanism. TCAF focuses on policy-based emissions reductions rather than project-specific offsets. This approach rewards countries for systemic reforms that cut emissions across entire sectors, such as energy pricing or industrial efficiency standards.

Uzbekistan’s success in securing this payment shows it can meet the reporting and verification standards required by international climate finance mechanisms. Consequently, it has built a foundation for broader carbon market participation.

Legal framework enables international carbon trading

In July 2025, Uzbekistan adopted Presidential Decree PF-110. This decree authorises participation in international carbon markets, according to the Partnership for Market Implementation. The decree provides the legal basis for Uzbekistan to sell carbon credits generated domestically to buyers in other countries.

A November 2025 update from the United Nations Development Programme (UNDP) confirmed that Uzbekistan also adopted new legislation creating a national carbon trading system. This domestic framework is designed to align with Article 6 of the Paris Agreement, which governs international cooperation on emissions reductions and carbon market mechanisms.

Article 6 establishes rules for countries to trade emissions reductions while avoiding double counting. It requires transparent accounting, registry systems, and mechanisms to ensure that credits represent genuine reductions. Uzbekistan’s legislation creates the domestic structures needed to meet these international standards.

The national carbon trading system will allow domestic entities to generate, trade, and retire carbon credits within Uzbekistan. Meanwhile, the presidential decree permits the export of credits to international buyers, including airlines seeking CORSIA-compliant offsets. Together, these measures create a dual-layer framework for carbon credit generation and trade.

Support from international organisations has been critical. The Partnership for Market Implementation, the UNDP, and the World Bank have all provided technical assistance. This support includes developing registry systems, establishing monitoring protocols, and training regulators. These elements are necessary for producing credits that international buyers trust.

CORSIA rules drive demand for approved aviation offsets

CORSIA requires airlines to offset emissions growth on eligible international routes. The scheme is administered by the International Civil Aviation Organization (ICAO). Airlines must purchase approved carbon credits to compensate for emissions above a baseline level. This creates ongoing demand for verified offsets.

Not all carbon credits qualify under CORSIA. Credits must meet specific criteria around additionality, permanence, verification, and avoidance of double counting. Only credits from approved programmes can be used for compliance. This limits the pool of eligible suppliers and tightens the market.

Global demand for CORSIA-eligible credits is expected to exceed supply. Airlines are facing increasing pressure to secure offsets as the scheme expands. Countries like Uzbekistan that can produce approved credits therefore gain strategic importance in the aviation compliance market.

Uzbekistan’s policy crediting approach under iCRAFT could generate credits that meet CORSIA criteria. Policy-based reductions are eligible provided they satisfy the scheme’s verification and transparency requirements. The World Bank’s involvement and the use of established monitoring systems support this potential.

However, approval is not automatic. Credits must be assessed against CORSIA’s eligibility criteria and listed by ICAO. Uzbekistan will need to apply for recognition under the scheme and demonstrate that its credits meet all requirements. This process involves submitting documentation, undergoing review, and potentially adjusting methodologies to align with ICAO standards.

For airlines, approved credits from new suppliers like Uzbekistan offer a way to manage compliance costs. For Uzbekistan, selling credits to airlines creates a revenue stream linked to emissions reductions. This mutual interest is driving the country’s engagement with international carbon markets.

What UK businesses should understand about this development

• Uzbekistan received the first policy crediting payment in June 2024, totalling $7.5 million for 500,000 tonnes of verified emissions reductions through the World Bank’s iCRAFT project.
• Presidential Decree PF-110 adopted in July 2025 authorises Uzbekistan to participate in international carbon markets, creating a legal basis for exporting carbon credits.
• New legislation adopted in November 2025 establishes a national carbon trading system aligned with Article 6 of the Paris Agreement, enabling domestic credit generation and international trade.
• CORSIA requires airlines to offset emissions growth on international routes using approved carbon credits, and global supply is expected to fall short of demand.
• Uzbekistan’s combination of verified reductions, legal framework, and international support positions it as a potential supplier of CORSIA-eligible credits, though formal approval is still required.
• The iCRAFT programme aims to reduce 60 million tonnes of CO2 overall, with Uzbekistan eligible to receive up to $20 million in grants as further reductions are verified.
• Support from the World Bank, UNDP, and the Partnership for Market Implementation has helped Uzbekistan build monitoring, verification, and registry systems needed for credible carbon credit production.

Practical considerations for supply chain and compliance planning

UK businesses with exposure to aviation supply chains or carbon markets should monitor Uzbekistan’s progress toward CORSIA eligibility. Airlines are actively seeking approved offsets to meet compliance obligations. Suppliers that understand emerging sources of credits can better anticipate market dynamics and pricing.

For companies involved in sustainable procurement and supply chain management, the development of new carbon credit sources affects vendor assessment and contract terms. Suppliers using aviation for logistics may face higher costs as airlines pass through offsetting expenses. Understanding where credits come from and whether they meet compliance standards helps evaluate these cost drivers.

Uzbekistan’s approach demonstrates how policy reform can generate tradable climate assets. This model may be replicated by other countries seeking to monetise emissions reductions. Businesses tracking carbon market trends should consider the implications of policy crediting programmes alongside project-based offsets.

However, Uzbekistan’s carbon market infrastructure is still maturing. Registry systems, verification protocols, and regulatory oversight are under development. Credits generated now may not immediately qualify for CORSIA or other compliance schemes. Businesses should verify approval status before relying on Uzbekistan-sourced credits for regulatory purposes.

The broader context is that carbon markets are fragmenting between compliance and voluntary standards. CORSIA represents a compliance market with strict eligibility criteria. Voluntary markets often accept a wider range of credits but face scrutiny over quality and additionality. Uzbekistan’s focus on policy crediting and international standards suggests an orientation toward compliance markets.

For firms pursuing carbon reporting and net zero commitments, understanding the difference between compliance-grade and voluntary offsets is essential. CORSIA-eligible credits meet rigorous standards but may command higher prices. Voluntary credits offer more flexibility but require careful due diligence to ensure environmental integrity.

UK businesses should also consider geopolitical and supply chain risks. Uzbekistan’s carbon market is backed by international institutions, which provides some assurance of standards and oversight. However, regulatory changes, political developments, or shifts in international support could affect credit availability and quality.

The opportunity lies in early engagement with emerging carbon markets. Businesses that establish relationships with new suppliers or build expertise in policy crediting mechanisms may gain competitive advantages. Similarly, firms advising clients on carbon markets can differentiate by understanding diverse credit sources and approval pathways.

Government and industry sources for detailed information

The World Bank provides detailed information on the iCRAFT programme and policy crediting mechanisms. Its announcements on Uzbekistan’s initial payment and the structure of the emissions reduction agreement are available through the World Bank’s official website. These resources explain how policy crediting differs from project-based offsets and outline verification requirements.

The International Civil Aviation Organization (ICAO) administers CORSIA and maintains a public list of eligible carbon crediting programmes. Businesses seeking information on approval criteria, application processes, and approved credit types should consult the ICAO CORSIA website. This source explains how credits are assessed and which programmes currently qualify.

The Partnership for Market Implementation offers updates on countries developing carbon market readiness under Article 6 of the Paris Agreement. Information on Uzbekistan’s legislative developments and technical assistance programmes is available through the Partnership’s official platform. This resource tracks implementation progress across multiple jurisdictions.

The United Nations Development Programme (UNDP) supports carbon market development in several countries, including Uzbekistan. Its updates on national trading systems and registry infrastructure provide context on how domestic frameworks align with international standards. Relevant reports and country profiles are accessible via the UNDP website.

UK businesses seeking practical guidance on carbon markets, offset procurement, and compliance planning can explore SBS compliance services and advisory support. Understanding how emerging credit sources fit into broader sustainability strategies helps businesses make informed decisions in a rapidly changing regulatory environment.