CORSIA Phase 1 market shows drops of demand; leaving the market at an impasse

Originally published on April 9, 2025 as part of Fastmarkets Carbon.

A total of 15 airlines have so far sourced CORSIA Phase 1 eligible credits from recent procurement events hosted by the International Air Transport Association (IATA), Guyana, Mercuria and Xpansiv. But most of these airlines have been using these events to source smaller volumes, around 10,000-20,000 tCO2e, as they start to “test the waters” of the current market.

At least one airline has recently been looking for larger volumes of a few hundred thousand CORSIA Phase 1 eligible credits, but limited supply and relatively high prices have been restricting trades. Others have been looking to source long-term offtakes, but uncertainty around future supply, including when and if credits from certain other projects will be tagged Phase 1 eligible, has again made these deals hard to conclude.

Supply is expected to increase in the coming months, particularly from cookstove developers. But the question around eligible insurance policies remains and is somewhat clouding the demand outlook. Most registries require insurance to guarantee against the potential revocation risk between a host country issuing a project a Letter of Authorization (LoA) and making a Corresponding Adjustment (CA).

Gold Standard currently only accepts insurance provided by the World Bank’s Multilateral Investment Guarantee Agency (MIGA), but has stated it will evaluate other insurance providers in the future. In the near term, this means only Gold Standard projects insured under MIGA will be CORSIA Phase 1 eligible.

The rejection of Verra’s VMR0006 cookstove methodology for CORSIA Phase 1 eligibility also creates another hurdle, with these projects having to transition to Verra’s VM0050 cookstove methodology as well as getting Verra-approved insurance. Verra is currently in the process of outlining what its insurance criteria will be, but this isn’t expected to be published until mid-year.

At the same time, some project developers have told Fastmarkets that despite the CORSIA market being a compliance program, they have seen some interest from potential buyers for specific projects or countries, signalling that some buyers are looking for “higher quality” projects and not just the baseline standard.

Other market participants have also expressed concern that some buyers may be registry-specific with their demand requirements. A soon-to-be-launched spot contract currently excludes credits generated by the Global Carbon Council registry.

But it remains to be seen how many credits from the registry will be Phase 1 eligible – sources have told Fastmarkets that eligible supply from the registry is likely to be minimal and could maybe hit 1 million-2 million tCO2e on the higher end during the phase.

Others have told Fastmarkets that they expect 2025 to be the “year of building” with more transactions and liquidity starting to emerge in 2026 and 2027 as supply concerns are addressed and more buyers become comfortable with the market. Airlines also have until January 2028 to retire credits to meet their obligations under the first phase of the scheme, leaving many without a need to rush into the market straight away.

Despite this, some airlines have stated that they will not “wait until the last minute” to engage and source credits under the program.

For in-depth coverage of these stories and access to regular updates, sign up for our free Fastmarkets Carbon Newsletter.