Travel, Tourism & Hospitality
Airlines face rising Corsia costs as 2027 offset demand hits 79MT: IBA
IBA, a leading aviation market intelligence and advisory firm, predicts that airlines will offset 79.25 million tonnes (MT) of carbon in 2027 under Phase 2 of CORSIA, despite tightening credit supply and rising compliance costs.
IBA, a leading aviation market intelligence and advisory firm, reports that airlines are forecast to offset 79.25 million tonnes (MT) of carbon in 2027 under Phase 2 of Carbon Offsetting and Reduction Scheme for International Aviation (Corsia), amid tightening credit supply and rising compliance costs.
With limited eligible supply and increasing demand, offset prices could surge to $25–$60 per tonne by the late 2020s, according to MSCI.
IBA estimates that carriers such as Emirates could face Corsia-related compliance costs of up to $346 million in 2027, equivalent to 3.5 per cent of its projected fuel budget.
According to insights from IBA’s NetZero platform, the top 10 airlines will be responsible for offsetting 29MT of emissions in 2027 alone.
This increase is driven by stronger participation in Phase 2 of CORSIA, alongside rising international air traffic.
IBA’s forecast aligns with IATA’s “Upper Bound” growth factor of 21.8 per cent above 2019, with Corsia obligations based on 85 per cent of 2019 emissions.
The burden is especially high in newly mandated regions such as Asia-Pacific, where India and China’s compliance from 2027 could drive 27MT of offset-eligible emissions.
While demand rises sharply, supply remains constrained. Only credits from ICAO-approved programs with valid Letters of Authorisation (LoAs) and host-country adjustments qualify.
As of mid-2025, just ~1,500 of 4,000+ eligible projects are in jurisdictions prepared to issue LoAs. Currently, only one Reducing Emissions from Deforestation and Forest Degradation (REDD+) programme in Guyana has issued Corsia-authorised credits (approximately 15.8M).
REDD+ is an UN-backed framework that generates carbon credits by protecting and sustainably managing forests.
Even with optimistic scaling of new mechanisms like jurisdictional REDD+ (J-REDD+) and the Paris Agreement Crediting Mechanism (PACM), IBA forecasts that total supply before 2027 is unlikely to exceed 136 million credits, which is barely enough to cover Phase 1 demand. -TradeArabia News Service