The CORSIA market is not a normal voluntary offset market with an aviation label on top. Demand is created by airline compliance obligations, while supply is restricted to credits that pass ICAO eligibility rules. That combination can create a premium when eligible supply is scarce, but it also makes the market sensitive to policy updates and approval bottlenecks.
What drives CORSIA demand?
CORSIA demand is shaped by international aviation emissions growth above the scheme baseline, the number of participating states, route coverage, sustainable aviation fuel use, and how quickly operators move from monitoring into cancellation. The first phase covers 2024 to 2026, with airlines expected to reconcile obligations after the end of the period.
IATA's August 2025 forecast points to a larger first-phase obligation than many early market participants expected. The exact figure will move with traffic, fuel use, exemptions and final implementation, but the direction is clear: first-phase demand is no longer theoretical.
Why supply is the harder side
Eligible supply is not just a function of how many carbon credits exist. It depends on how many units meet CORSIA programme, vintage, methodology and host-country authorisation conditions. That narrows the pool sharply.
For developers, the biggest practical issue is often authorisation. If a credit needs host-country approval and corresponding-adjustment treatment, the project depends on national processes that may be slower than registry issuance. A project can have issued credits and still not have freely saleable CORSIA supply.
Price drivers to watch
- ICAO approvals: new programme or scope approvals can increase supply and soften scarcity.
- Host-country letters: more authorisations can unlock supply; delays can preserve a premium.
- Airline procurement timing: early buying can move prices before formal cancellation deadlines.
- Credit quality: eligible does not mean identical. Buyers may still prefer certain geographies, project types or co-benefits.
- Policy risk: changes to eligibility, national rules or Article 6 accounting can change market access.
What this means for project developers
CORSIA can justify a higher price assumption in a feasibility model only when eligibility risk is dealt with explicitly. A developer should not simply apply a CORSIA premium to all future credits. The model needs separate cases: ordinary voluntary sale, voluntary sale with strong buyer preference, and CORSIA-eligible sale with authorisation secured.
That discipline matters because the downside is asymmetrical. If a project is modelled at a CORSIA price and later fails eligibility, the commercial case can unwind quickly.
A sensible modelling approach
- Start with a conservative voluntary-market price case.
- Add a CORSIA case only for the share of units likely to meet eligibility rules.
- Separate issued credits from authorised, CORSIA-ready credits.
- Model delayed sale if host-country authorisation is uncertain.
- Use offtake terms to protect both price upside and delivery risk.
If a buyer wants future CORSIA supply, make sure the offtake contract handles eligibility failure, timing delays and host-country authorisation risk.
Read the offtake guide →