Could The Clock Restart? Meeting CORSIA Deadlines Amid EU ETS Pressure

September 15, 2025

CORSIA and international aviation carbon compliance: The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) requires airlines to offset CO₂ emissions above 2019 levels, creating strong demand for verifiable, high-quality emissions units (EEUs) and pushing operators to build robust monitoring, reporting, and offsetting systems ahead of the early 2028 compliance deadline.
Risk of EU ETS intervention: If CORSIA is implemented inadequately, the EU could reapply its Emissions Trading Scheme (ETS) to flights to and from the European Economic Area, potentially increasing carbon costs up to four times per tonne and threatening a level playing field for international airlines.
Strategic carbon management for airlines: Early investment in long-term offset agreements, nature-based solutions, and trusted EEU providers can help aviation operators manage cost volatility, secure market access, and demonstrate climate responsibility while complying with ICAO’s strict CORSIA standards.

Economic powers have long sparred over tariffs, market access and the price of doing business across borders – and carbon pricing is no exception. A dispute over fairness and competitiveness between the European Union and particularly China led the EU to pause the application of the EU’s Emissions Trading Scheme (the ETS) to flights departing the European Economic Area (the EEA) or arriving into the EEA from outside the EEA in 2012. Stopping the clock on the application of the ETS to such flights was intended to allow time for developing a global approach for reducing international aviation’s carbon emissions.

That global answer, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), was launched by the International Civil Aviation Organization (ICAO) to stabilise CO₂ emissions from international flights at 2020 levels. Now well into its first mandatory compliance phase following its post-2024 ramp-up, aircraft operators and participating nations have little time left to build robust systems before the current period for compliance ends in early 2028.

If those nations fail they risk facing even more expensive regional measures, particularly under the ETS, which could look to tighten its grip on aviation’s carbon output.

The ETS uses a “cap-and-trade” model that steadily reduces the emissions cap, driving up the cost of allowances over time – at the time of writing, the cost of an EU Allowance (EUA) is approximately €72 per tonne of CO₂e. By its own accounting, the ETA has been a success in reducing emissions, including reducing emissions from European power and industry plants by approximately 47% by 2023, compared to 2005 levels. Given this success, European regulators — who will review the ETS’s application to international aviation in June 2026 — may be unwilling to accept a watered-down global scheme if CORSIA appears off course in delivering measurable reductions.

At the heart of CORSIA is a carbon offsetting scheme requiring operators to buy eligible emissions units (EEUs) to compensate for any growth in their carbon output beyond a 2019 baseline, creating a significant demand for verifiable, high-quality offsets. These offsets must meet ICAO’s sustainability and additionality requirements to be eligible to be applied against excess emissions – at the time of writing, the cost of an EEU future is approximately US$16-18 per tonne of CO₂e, depending on whether delivery of the unit is due in December 2025, 2026 or December 2027.

For operators and the aviation sector more broadly, the risk is that a failure by participating states to implement CORSIA in a meaningful way – implementing the Standards and Recommended Practices (SARPs) developed by ICAO for CORSIA that outline the technical specifications and requirements for implementing CORSIA, including monitoring, reporting, verification, and offsetting of CO₂ emissions from international aviation – may result in the EU determining that the implementation of CORSIA is inadequate, particularly if there are no robust enforcement mechanisms.

The EU could then decide that flights to and from the EEA would be subject to the ETS, with the potential of costs (i) at close to four times the price per tonne of CO₂e and (ii) not subject to the 2019 baseline. Additionally, it remains to be seen if the EU would seek to apply the ETS to the full duration of all flights to and from the EEA, or if it would apply only in relation to a portion of those flights. Nonetheless, the potential increase in cost, as well as the loss of a level playing field between regions, is something operators will wish to avoid.

As CORSIA phases advance and operators ramp up compliance purchases, demand for EEUs may exceed supply, leading to price spikes and potential volatility. Prices may also increase as the cost of generating the underlying EEU increases – typical lower cost projects such as cook stove replacement and mangrove planting reach their practical limits (there being a finite number of (i) stoves that need replacing and (ii) coastal areas that need replanting). As the supply of “low-hanging fruit” of cheaper projects dwindles over time, so the cost of EEUs would be expected to increase.

It is worth noting that whilst there may be concerns that purchasers of offsets are motivated by costs rather than altruism, CORSIA represents a large-scale opportunity to fund projects, particularly in the global south, that otherwise may struggle to attract funding, with oversight that voluntary projects may lack.

Securing long-term agreements with trusted offset providers and investing early in carbon removal or nature-based solutions, in compliance with the strict requirements of CORSIA, can help smooth some of the pricing volatility and take advantage of earlier lower prices. Yet this is a steep learning curve for an industry that has traditionally focused on fuel efficiency rather than carbon markets, even in the context of this mandatory requirement.

Ultimately, the time pressure on CORSIA is a wake-up call for aviation. The sector is not only fighting to maintain its license to grow, but also to avoid a patchwork of conflicting carbon regulations that could undermine competitiveness. Acting now, ensuring full implementation of CORSIA whilst building credible offset strategies and collaborating with more advanced carbon sectors, may help protect market access, manage carbon costs, and maintain consumer trust in an era of heightened climate scrutiny.