According to Quantum Commodity Intelligence, the International Civil Aviation Organization (ICAO), a UN body, has officially approved Verra, Gold Standard, Global Carbon Council (GCC), and Climate Action Reserve (CAR) standards to supply carbon credits for the aviation sector’s Corsia decarbonization program.
However, the supply of carbon credits for airlines is expected to remain constrained next year due to issues with international carbon accounting processes and associated political risk insurance.
After resubmitting applications to better align with ICAO’s requirements, ICAO’s Technical Body has approved Verra, Gold Standard, GCC, and CAR. Each of these organizations has confirmed the news.
Margaret Kim, CEO of Gold Standard, shared: “Our approval under ICAO’s Corsia scheme is a significant milestone for Gold Standard and our partners in the carbon market. We are proud to offer project developers the opportunity to contribute to global decarbonization efforts while maintaining rigorous standards for environmental integrity and sustainable development.”
Verra’s CEO, Mandy Rambharos, said this approval would allow Verra to leverage its frameworks, enabling host countries to authorize carbon credits under Article 6 of the Paris Agreement – a necessary step for these credits to qualify under Corsia. “Verra will now work on the details of the approval and finalize the associated labeling guidance to facilitate ICAO’s decision,” she added.
Craig Ebert, President of CAR, said the accreditation would enable airlines to support emissions reductions that meet ICAO’s comprehensive standards.
GCC emphasized that, as the only Corsia-approved carbon crediting program in the Global South during the initial phase, GCC is well-positioned to support the international aviation sector in achieving carbon-neutral growth.
While ICAO has not yet officially commented on the decision, some sources note there will be challenges in implementing corresponding adjustments (CA) for Emission Reduction Units (EEUs) and addressing potential risks from carbon accounting processes.
Challenges of Corresponding Adjustments (CA) and Carbon Accounting Infrastructure
A Corresponding Adjustment (CA) is an action that host countries take to separate emissions reductions sold to international buyers from reductions counted toward their national climate plans (NDC). Currently, few CAs have been issued, with most being Letters of Authorization (LoA) – which are commitments rather than guarantees to implement CA.
In many developing countries, the process of building accounting and digital infrastructure, such as carbon credit registries, is progressing slowly, impacting the transparency and efficiency of the carbon market. Many legal experts warn that existing LoAs may not be a sufficient legal basis for carbon credit contracts.
To mitigate CA-related risks, private insurers have introduced several insurance products over the past year, although these providers admit that comprehensive coverage for all political risks associated with CA is challenging.
Future Directions and Carbon Credit Demand Forecast
According to Gold Standard, for EEUs to qualify under the Corsia program, projects need authorization from the host country under Article 6 of the Paris Agreement. Project developers will need to choose one of two available routes to manage the risk of double-counting with the host country’s NDC. One route is awaiting the finalization of CA in Biennial Transparency Reports (BTR), while the other involves securing insurance to substitute carbon credits if the host country double-counts the emissions reductions supporting the EEUs.
The World Bank’s Multilateral Investment Guarantee Agency (MIGA) is expected to soon launch political risk insurance products related to Article 6 and Corsia, which will help more Corsia market participants utilize this insurance.
The International Air Transport Association (IATA) estimates that airline demand for carbon credits could reach 162 million units during the 2024-2026 compliance phase. However, analysts project this number may be significantly higher due to delays in the supply of sustainable aviation fuel (SAF).
Analyst firm MSCI is soon expected to publish research on Corsia market fundamentals, highlighting a supply shortage in 2025 and beyond. This perspective may put pressure on airlines, as carbon credits from Verra, Gold Standard, and CAR, while approved, may still face implementation challenges.
