VIVAERO

IATA and market stakeholders call for urgent action on carbon credit availability

The International Air Transport Association (IATA), in collaboration with several carbon market stakeholders, is calling on governments around the world to take immediate action to address the critical shortage of available carbon credits.

These credits are essential for airlines to meet their obligations under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

The signatories of the statement emphasize the need for governments to issue Letters of Authorization (LoAs), which allow the release of CORSIA-Eligible Emission Units (EEUs) for purchase by airlines.

The timely issuance of these letters is critical to creating a robust and transparent market for CORSIA EEUs; facilitating the successful implementation of CORSIA; and protecting the environmental integrity of international aviation's climate commitments. "CORSIA is a vital part of aviation's global climate strategy. Through it, airlines mitigate their climate impact by financing verified emissions reductions in other sectors. In addition to generating climate finance, CORSIA plays an essential role in both environmental and socioeconomic progress, especially in developing countries. To unlock CORSIA's financial potential and ensure its contribution to aviation decarbonization, states must authorize the release of EEUs. This is one of our key messages to the 193 member states at the ICAO Assembly," said Yue Huang, Assistant Director for Climate Policy, during an ICAO Skytalks session at the 42nd ICAO Assembly in Montreal, Canada.

What are Letters of Authorization (LoAs)? They are official documents issued by host countries authorizing the use of carbon credits (known as Internationally Transferred Mitigation Outcomes or ITMOs) for CORSIA compliance, in accordance with the provisions of Article 6 of the Paris Agreement.

The letters confirm that emissions reductions associated with a carbon credit will be counted only once, as part of CORSIA, requiring the host country to apply a “corresponding adjustment” to its own Nationally Determined Contribution (NDC).

Without LoAs, airlines will face a shortage of CORSIA-eligible units, jeopardizing the initiative and depriving project developers of airline funding.

IATA predicts that airlines will need between 146 and 236 million EEUs during the first phase of CORSIA (2024–2026). However, the current supply of CORSIA-eligible units is limited to 15.8 million credits provided by Guyana. To assist states in issuing LoAs, IATA has published guidance documents and offers practical tools and workshops. The Joint Communiqué's signatories include airline industry associations such as IATA, the African Airlines Association, the Air Transport Action Group, and others, as well as carbon market stakeholders and project developers such as Burnstoves, Hestian, Iceberg, and Koko Networks.

Pressure is mounting on governments to act quickly, as the continuation of CORSIA and global aviation's climate goals depend on the availability of adequate and affordable carbon credits.