International flights within the scope of CORSIA are attributed to an aeroplane operator, and each operator is attributed to an administrating State to which it must submit an Emissions Monitoring Plan. Since 1 January 2019, an aeroplane operator has been required to report its annual CO2 emissions to the State to which it has been attributed, irrespective of whether it has offsetting obligations. As of 1 January 2021, the State will calculate annual offsetting requirements for each operator that has been attributed to it by multiplying the operator’s CO2 emissions covered by CORSIA offsetting obligations with a Growth Factor. For years 2021-2029, the Growth Factor represents the percentage growth of the aviation sector’s international CO2 emissions in a given year compared to the sector’s baseline emissions. From 2030 onwards, a component will be introduced into the Growth Factor to account for the individual aeroplane operator’s growth against its baseline.
At the end of the 3-year compliance period, an aeroplane operator must meet their offsetting requirements by purchasing and cancelling certified CORSIA eligible emissions units. Each emissions unit represents a tonne of CO2 reduced, or avoided, as compared to a scenario without the CORSIA eligible emissions unit. In order to safeguard the environmental credibility of offset credits used under CORSIA, the emission units must comply with the Emission Unit Criteria approved by the ICAO Council (
). Aeroplane operators can also reduce their offsetting requirements by using CORSIA eligible fuels that meet CORSIA sustainability criteria in proportion to their life-cycle CO2 savings above a minimum threshold of 10%
ICAO has established a Technical Advisory Body (TAB) to undertake the assessment of Emissions Unit Programmes against the approved Emissions Units Criteria, and to make recommendations on their use within CORSIA. To date, the ICAO Council has approved eight emissions unit programmes to supply CORSIA Eligible Emissions Units
Projects that are designed to remove carbon from the atmosphere can include both natural and technological carbon removal processes (e.g. planting trees, Direct Air Capture), and have a potential to produce high-quality carbon offsets in the future.
The adoption of rules for international carbon markets under Article 6 of the Paris Agreement was completed at the COP26 meeting in Glasgow during November 2021
. These rules require a host country to authorize carbon credits for ‘international mitigation purposes’, such as CORSIA, and to ensure that these emission reductions are not used to achieve its National Determined Contribution (NDC) under the UNFCCC process. Both sides of the adjustments (the seller and the buyer) must occur within the same NDC period. These rules are designed to guarantee that corresponding adjustments take place prior to these emission reductions being used to demonstrate compliance with CORSIA, thereby avoiding double-counting.
What are the differences and similarities between the EU ETS and CORSIA?
The EU ETS is a cap-and-trade system, which sets a limit on the number of emissions allowances issued, and thereby constrains the total amount of emissions of the sectors covered by the system. In the EU ETS, these comprise operators of stationary installations (e.g. heat, power, industry) and aircraft operators. The cap for aviation in the EU ETS is 95% of the average emissions between 2004 and 2006, adjusted for the changes in the applicability scope. The total number of emissions allowances is limited and reduced over time, thereby driving operators in need of additional allowances to buy these on the market from other sectors in the system – hence ‘cap-and-trade’. This ensures that the objective of an absolute decrease of the level of CO2 emissions is met at the system level. In the case of the ETS, the European Commission proposal
is expected to lead to emission reductions of 61% in 2030 compared to 2005 levels for the sectors covered by the EU ETS. The supply and demand for allowances establishes their price under the ETS, and the higher the price, the higher the incentive to reduce emissions in order to avoid having to buy allowances.
The ICAO CORSIA is an offsetting scheme with an objective of carbon neutral growth designed to ensure CO2 emissions from international aviation do not exceed 2020 levels. To that end, aeroplane operators will be required to purchase offset credits to compensate for emissions above the CORSIA baseline or use CORSIA Eligible Fuels. The observed spread of the cost of CORSIA eligible emission units has been high and dependent on the project category
EU ETS allowances are not accepted under CORSIA, and international offset credits, including those deemed eligible under CORSIA, are not accepted under the EU ETS as of 1 January 2021.
Both the EU ETS and CORSIA include similar Monitoring, Reporting and Verification (MRV) systems, which are aimed to ensure that the CO2 emissions information collected through the scheme is robust and reliable. The MRV system consists of three main components: first, an airline is required to draft an Emissions Monitoring Plan, which needs to be approved by a relevant Competent Authority. After the Plan has been approved, the airline will monitor its CO2 emissions either through a fuel burn monitoring method or an estimation tool. The necessary CO2 information will be compiled on an annual basis and reported from airlines to their Competent Authorities by using harmonised templates. A third-party verification of CO2 emissions information ensures that the reported data is accurate and free of errors. A verifier must be independent from the airline, follow international standards in their work and be accredited to the task by a National Accreditation Body.