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Early last month, the supply of CORSIA-eligible credits received a slight boost of 1.5M clean cookstove credits from the Hestian’s Malawi Biomass Energy Conservation Programme (GS 11677), hosted by the Gold Standard registry. Only around 2,500 of these credits have been retired so far.
The supply uptick has compounded a downward trend for CORSIA P1 spot prices, with levels cancelling all the gains made since last December to settle at $21.25/t CO2e last week, from a peak of $23.20/t CO2e in October.
Market participants also seem to be anticipating lower prices in future, with the ICE CORSIA futures DEC-25 contract dipping to $18/t CO2e in the first week of December, after two months hovering around $20/t CO2e in October and November. The 9% increase in supply, which has taken the tally from the previous 15.9Mt CO2e – deriving exclusively from the Guyana J-REDD+ project under the ART TREES registry – to 17.6Mt CO2e, might not be the sole culprit behind the drop.
The week after Gold Standard applied the CORSIA P1 tag on the 1.5M CORSIA-eligible cookstove credits, ICAO decided to retroactively reverse the exclusion of Verra’s AMS-II.G (Energy efficiency measures in thermal applications of non-renewable biomass) and VMR0006 (Energy Efficiency and Fuel Switch Measures in Thermal Applications) methodologies from the pool of eligible credits for Phase 1 and 2, providing further supply potential.
To date, the two methodologies have issued a combined total of 56Mt CO2e from 168 projects. Of these, a little under 47Mt CO2e are potentially eligible for CORSIA phase one, 17Mt CO2e of which retired, for a total of 30Mt CO2e available. Currently, only 3.8Mt CO2e of the credits feature a Letter of Authorisation (LoA), 2.6Mt CO2e under VM006 and the rest under AMS-II.G. These derive from projects in Cambodia, Madagascar, Rwanda and Sierra Leone.
The pace at which the overall supply from the two methodologies will come online is contingent on the release of more LoAs from respective countries, along with the related corresponding adjustments (CAs) and any required insurance products against potential governments’ changes of mind.Clean or improved cookstove credits vary widely in quality, with the vast majority of non-CORSIA supply usually trading at discounts to recent-vintage, high-quality REDD+ credits, such as the J-REDD+ tonnes from the Guyana project.
ICAO’s exclusion reversal of Verra’s VMR006 and AMS-II.G methodologies – overseeing cookstove projects – has raised some concerns among market participants regarding a potential dip in the overall quality of CORSIA supply. The wider the variation in supply quality, the less relevance airlines will likely place on the CORSIA label per se, rather than the specific credit type and price.
Supply for CORSIA P1 will also include a small influx of recently-approved engineered carbon dioxide removals (CDR), which the market often perceives as of higher quality. Alongside Verra’s cookstove methodologies, ICAO has also greenlit credits from the CDR-focused Isometric registry, and some projects under Verra’s VM0049 Carbon Capture and Storage methodology.
However, supply is limited. To date, the Isometric registry has issued a total of 46,000 credits, 13,000 of which have been retired, for a total availability of 33,000 credits.
Verra has no actively-issuing projects under VM0049, and only one of the three projects listed in its pipeline, the STRATOS direct air capture (DAC) project, qualifies under ICAO guidelines, as it uses VM0049 along with the Module for CO2 Transport for CCS Projects (VMD0057) and the Module for CO2 Storage in Saline Aquifers and Depleted Hydrocarbon Reservoirs (VMD0058). The project has an estimated annual emission removals of 433,000t CO2e.
Even if more CDR credits are issued on either Verra or Isometric registries, these will likely struggle to compete with more affordable REDD+ or cookstove credits in P1.
The aviation and carbon markets are eagerly awaiting some confirmation from ICAO over the 2024 annual sector’s growth factor (SGF), due to be announced by 12 December. In the fourth edition of the CORSIA Annual SGF released early November, the body released a 16% (15.95%) SGF for the year, displaying a steady recovery from pandemic levels.
However, ICAO has announced it might bring it down by between 0%-2%. “In the event of a revised SGF2024 value being applicable, a revision to the fourth edition will be published by 12 December 2025,” said the organization. ICAO has not disclosed any official reasons behind the potential reduction.
It is the first time the SGF triggers mandatory demand for the scheme, after three years of SGF at 0%. The increase is mainly due to the reduction of the baseline from 100% of 2019 in the pilot phase (2021-2023) to 85% of the same year’s emissions for the first phase (2024-2026). Between 2023 and 2024 the number of CORSIA-participating states grew from 115 to 126, and while emissions jumped by 10% from 330Mt to 363Mt, the 2019 baseline dropped by 13% from 351Mt CO2e in 2023 to 306Mt CO2e in 2024.
The SGF has been calculated since the start of CORSIA pilot phase in 2021 and refers to the surplus between total emissions of participating countries in a specific year and their respective 2019 baseline. The surplus is then set against the specific year’s emissions to retrieve the SGF percentage.
States participating in CORSIA’s first phase are to use the SGF to calculate their respective airlines’ obligations, by multiplying the operators’ emissions by the given percentage. This translates into a total demand for 2024 of 58Mt CO2e. A revision of 1% would take total demand down to 54Mt CO2e, while a 2% drop would cut the tally to just under 51Mt CO2e. Note the ICAO SGF figures include all CORSIA covered emissions, whereas Fastmarkets projections exclude intra-EEA flights which are covered by the EU ETS.
As of December 2025, the number of CORSIA-participating countries has grown to 130. Despite the scheme’s first phase now in full force and entering its third and final year, uncertainties still affect the market. Current prices and price expectations remain low, amid concerns regarding the quality of the expanded supply and hesitant demand.
As the retirement deadline of 2028 approaches, others factors such as penalties, SAF mandates and airlines’ income percentage allocations might influence market balance, as we discussed more extensively in our in-depth analysis on the upcoming CORSIA demand.
Fastmarkets aims to elevate transparency in the sector by providing reliable, objective and timely information to help you approach the market with confidence. Our news and insights into policy developments, issuance and retirements, as well as supply dynamics, will keep you informed and allow for more confident decision making when navigating the carbon credit market.