CORSIA Market Set for Turbulence, Says Sylvera

As the aviation sector enters the First Phase of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a new report by climate data firm Sylvera paints a sobering picture of what lies ahead: a market defined by uncertainty, inadequate credit supply, and inconsistent regulatory enforcement. The findings stem from Sylvera’s first-ever scenario modelling exercise, simulating supply, demand, and price trajectories for CORSIA’s initial compliance cycle running from 2024 to 2026.

The “CORSIA First Phase Scenario Modeling” report by Sylvera draws on expert roundtables, registry data, and agent-based market simulations to provide a forecast of price, supply, and demand dynamics in the aviation carbon market under ICAO’s CORSIA framework.

Credit Crunch in the Skies

At the heart of the issue is the challenge of credit authorisation. Under CORSIA rules, airlines are required to purchase and cancel Eligible Emissions Units (EEUs) to offset emissions that exceed 85% of their 2019 levels. These credits must be authorised by host countries and include corresponding adjustments under Article 6 of the Paris Agreement.

However, Sylvera’s modelling warns that the volume of authorised credits may fall far short of what’s needed. Of the more than 4,000 technically eligible projects, only around 1,500 are located in countries considered moderately prepared to provide authorisations. Even fewer have received Letters of Authorisation (LoAs), a mandatory prerequisite for CORSIA eligibility. The current supply of usable EEUs is therefore limited and heavily concentrated — largely reliant on a single jurisdictional REDD+ programme in Guyana, which issued 15.8 million credits by mid-2025.

Scenarios Suggest Tight Supply and High Prices

Sylvera modelled six scenarios to reflect different levels of compliance and supply. In the most optimistic case (Scenario A), where 30 or more countries ramp up authorisations and programmes like JREDD+ and PACM contribute robustly, supply could reach 274 million EEUs. However, this is widely considered improbable.

More likely scenarios, such as partial or delayed compliance paired with limited supply (Scenarios D and E), suggest available credits may range from 136 to 144 million EEUs — barely sufficient to meet even reduced demand.

Price projections across the scenarios varied sharply. Under full compliance with moderate supply (Scenario B), EEU prices could hit US$36 by 2027. In scenarios with restricted supply and delayed compliance, prices could soar past US$60. The modelling also indicates that even with weaker demand, constrained supply would keep prices elevated.

Industry Hesitation and Patchy Enforcement

Despite 129 countries voluntarily participating in CORSIA’s First Phase, the report highlights that fewer than 15 nations have enacted or proposed domestic regulations to enforce compliance. Notably, the world’s two largest aviation markets — the United States and China — have yet to signal enforcement intent.

This regulatory ambiguity has resulted in hesitancy among airlines, many of which are unsure whether to commit to purchasing EEUs amidst such limited supply and unclear enforcement. In Sylvera’s survey of 40+ market experts, the most probable outcome identified was partial compliance with limited supply, receiving the largest share of expert votes.

Potential Market Value and Implications

Depending on compliance and supply levels, the value of the CORSIA First Phase market could range from US$1.8 billion to US$5.2 billion. These figures rival the size of the entire voluntary carbon market on an annualised basis, signalling CORSIA’s potential to transform the offsetting landscape—if implementation challenges are addressed.

Sylvera’s modelling estimates demand could reach 144 million EEUs in a full compliance scenario, while partial compliance would reduce that figure to around 74 million. This wide disparity underscores how policy and enforcement decisions will shape the future of this compliance market.

What’s at Stake

The report warns that unless governments act quickly to clarify enforcement and unlock supply through host-country authorisations, CORSIA risks becoming another unrealised climate initiative. With the compliance deadline for the First Phase set at 31 January 2028, time is running out for stakeholders to resolve the scheme’s bottlenecks.

Sylvera concludes that stakeholders who move early to secure high-quality, compliant credits stand to benefit significantly, both in meeting obligations and in managing rising costs. However, the need for transparency, integrity, and international coordination has never been more critical.