Amid airport expansion plans and rising demand for flights, we get to grips with the Carbon Offsetting and Reduction Scheme for International Aviation, and hear how this could provide a workable model for other industries struggling to meet emissions goals.
Few can disagree that aviation delivers substantial social and economic benefits to communities by connecting markets, supporting trade and underpinning jobs across the value chain.
In industrialising economies with growing middle classes, rising demand for air travel is part of a broader story of integration into the global economy. At the same time, aviation emissions are material and difficult to abate quickly given the reliance on liquid fuels as well as the long lifecycle of aircraft and related infrastructure.
The underlying policy question we are left with is straightforward but contentious: should aviation be allowed to expand to meet demand, particularly in emerging markets, or should growth be restricted to curb emissions?
For now, the international consensus has been to allow expansion but to seek to manage its climate impact. The gap between reductions that the introduction of sustainable aviation fuels, more efficient aircraft and operational improvements provide and, on the other hand, achieving net zero, has so far required an approach that relies on offsets playing a credible role to encourage consumer trust.
What does CORSIA do?
The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), agreed at International Civil Aviation Organisation (ICAO) in 2016, was designed to provide a market-based mechanism to facilitate the use of offsets in the form of eligible emissions units (EEUs) to offset any growth in international aviation’s emissions.
Pursuant to CORSIA, airlines falling within the scheme are required to offset the growth in international emissions above a baseline by purchasing EEUs from approved programmes. The scheme is not a substitute for investment in sustainable aviation fuel, hydrogen or efficiency gains, but has been described as an interim mechanism to mitigate emissions while new technologies develop and scale.
The quality of EEUs matters both for environmental integrity and for maintaining confidence among regulators, investors and the travelling public. Aviation’s visibility means that any shortcomings in offset markets would be quickly exposed. Offsetting can help direct capital into projects such as renewable energy and reforestation that might not otherwise proceed, particularly in the Global South. As a result, if CORSIA is successful, the positive ripple effects can help reinforce the perception that there is integrity in the offset market and this can have a meaningful global impact.
Growing time pressure?
An immediate test of how regional and global approaches can work together is the European Union’s upcoming decision on whether to extend Stop the Clock. At present, the EU Emissions Trading System (EU ETS) applies only to flights within Europe with obligations for long-haul flights paused pending the introduction of CORSIA following challenges from third party countries. The decision facing policymakers in mid-2026 is whether to continue that pause.
If the EU maintains Stop the Clock, it would potentially signal confidence in CORSIA as the global mechanism for aviation offsets. If the scheme ends, airlines may face overlapping obligations under both the EU ETS and CORSIA, raising questions about duplication and the interaction between regional and global carbon regimes.
Additionally, complying with the EU ETS is currently more expensive than purchasing EEUs and doesn’t direct funding towards the Global South. The outcome will be watched closely by airlines and other sectors, since it illustrates how international and domestic measures may or may not be reconciled.
CORSIA’s structure may offer lessons for industries beyond aviation that are struggling to abate emissions. Its global scope reduces the risk of competitive distortion, while centralised governance through ICAO sets clear eligibility rules for offsets which may have already influenced the voluntary carbon market by pushing standards higher. The phased rollout allows operators to adjust before obligations became mandatory.
As the scheme is embedded in a wider strategy that recognises offsets as transitional, not permanent, while technology solutions mature. Something that sectors such as shipping, steel and cement may also benefit from given they are up against similar challenges to aviation. A framework with consistent international rules and credible offsetting requirements could help them balance growth with climate responsibilities, in much the same way aviation has attempted to do.
Finding anybody that claims CORSIA is flawless would be a challenge — the baseline was adjusted after the pandemic and it still doesn’t include non-CO₂ impacts. Its implementation has also taken too long, and poses a real risk that sufficient EEUs are available for retirements in the current phase and that enforcement rules are adequately implemented in participating jurisdictions. But it demonstrates that a global sectoral offsetting scheme is possible and can be implemented, and if the shortcomings can be accepted — and we refuse to allow the ‘imperfect’ to be an obstacle for ‘good’ – the scheme can serve as useful guidance for other industries looking to integrate offsetting into net zero pathways.
John Pearson is Partner in the Global Transportation Finance team at Vedder Price, an international business-focused law firm.
Image: Josue Isai Ramos Figueroa / Unsplash
More Case Studies, Features and Industry Insight:
Quick question: how can human psychology help solve the water crisis?
Streamlining planning consultation on energy and infrastructure schemes: pros and cons