What CORSIA is
CORSIA is the only global market-based mechanism for reducing CO2 emissions from international aviation. Adopted by ICAO in 2016 and operational since 2021, it requires airlines to offset emissions growth above a defined baseline. The scheme runs through 2035.
The baseline is set at 85% of 2019 CO2 emissions from international civil aviation. Any emissions above that threshold must be compensated through carbon credits or CORSIA Eligible Fuels (CEF).
The three phases
| Phase | Period | Participation | Coverage |
|---|---|---|---|
| Pilot | 2021-2023 | Voluntary | ~50 states, covering ~75% of international RTK |
| First (current) | 2024-2026 | Voluntary | ~120 states, similar coverage |
| Second | 2027-2035 | Mandatory | All states except exempted categories, ~85% |
The shift from Phase 1 to Phase 2 is not incremental. It's structural. Voluntary participation becomes mandatory for all ICAO member states, with narrow exemptions for Least Developed Countries (LDCs), Small Island Developing States (SIDS), Landlocked Developing Countries (LLDCs), and states accounting for less than 0.5% of global international RTK in 2018.
What changes in 2027
Coverage expands dramatically
Phase 2 is expected to bring in China, Brazil, India, and other large aviation markets that opted out of the voluntary phases. This expands coverage from around 120 states to potentially all ICAO members minus the exempted categories.
Offsetting demand scales
Cumulative offset demand during Phase 2 is projected at 1-1.5 billion tonnes of CO2 equivalent. Annual requirements are expected to ramp from 62-88 million tonnes in 2027 to 166-257 million tonnes by 2035, depending on emissions growth trajectories.
The growth factor becomes the key metric
Each year, ICAO publishes a Sector's Growth Factor (SGF) that determines how much each airline must offset. For 2024, the SGF was 0.154 (15.4% growth above the 85%-of-2019 baseline). The 2027 SGF will be calculated from 2026 emissions data. Airlines with higher-than-average growth face proportionally larger obligations.
CORSIA Eligible Fuels: the SAF connection
CORSIA allows airlines to reduce their offsetting requirements by purchasing CORSIA Eligible Fuels (CEF). These include:
- Sustainable Aviation Fuels (SAF) certified through ICAO-approved sustainability schemes (ISCC, RSB, etc.)
- Lower Carbon Aviation Fuels (LCAF) that achieve at least 10% lifecycle GHG reduction vs. conventional jet fuel
The emissions reduction from CEF is subtracted from the airline's offsetting obligation. One tonne of CO2 avoided through SAF equals one tonne that doesn't need to be offset through carbon credits.
Airlines face a strategic choice: buy carbon credits at $5-50/tonne, or buy SAF at a $2,000-6,000/tonne premium that also satisfies ReFuelEU, UK SAF Mandate, and other blending obligations simultaneously.
The economics of compliance
Carbon credits vs. SAF
| Compliance path | Cost per tonne CO2 | Satisfies CORSIA? | Satisfies ReFuelEU? |
|---|---|---|---|
| Carbon credits (CORSIA-eligible) | $5-50 | Yes | No |
| HEFA SAF | ~$200-400 (per tonne CO2 avoided) | Yes | Yes |
| PtL/e-SAF | ~$800-2,500 (per tonne CO2 avoided) | Yes | Yes (counts as e-fuel) |
On a pure per-tonne-CO2 basis, carbon credits are dramatically cheaper. But airlines operating in Europe face ReFuelEU's 2% SAF mandate (rising to 6% in 2030), which cannot be satisfied by credits. Airlines operating in the UK face the UK SAF Mandate. For these carriers, SAF purchases do double duty: satisfying both the blending mandate and reducing the CORSIA offsetting requirement.
The dual-mandate advantage
An airline buying 10,000 tonnes of HEFA SAF for ReFuelEU compliance simultaneously reduces its CORSIA offsetting obligation by approximately 25,000-30,000 tonnes of CO2 (depending on the fuel's lifecycle emissions factor). At $10-30/tonne for CORSIA-eligible credits, that's $250,000-900,000 in avoided offsetting costs. This offset saving reduces the effective SAF premium significantly.
Who is exempt
Phase 2 exempts flights to and from:
- Least Developed Countries (LDCs) as classified by the UN
- Small Island Developing States (SIDS)
- Landlocked Developing Countries (LLDCs)
- States representing less than 0.5% of global international RTK in 2018
These states may still participate voluntarily. Domestic flights are not covered by CORSIA (they fall under national schemes like the EU ETS or the UK ETS).
What airlines should do now
- Map your route-pair exposure. Identify which international routes fall under mandatory CORSIA coverage from 2027. Routes involving exempt states reduce your obligation.
- Model the offsetting bill. Apply the 2024 SGF (15.4%) to your international emissions as a floor estimate. Your actual 2027 obligation will depend on the published SGF for that year.
- Stack your mandates. If you operate in Europe or the UK, model SAF purchases that satisfy both CORSIA and ReFuelEU/UK mandate simultaneously. The dual benefit changes the break-even calculation.
- Secure SAF offtake. CORSIA-eligible SAF supply is constrained. Airlines that wait until 2027 to purchase will face higher prices and limited availability. Current SAF feedstock prices suggest the window for favorable long-term offtake agreements is narrowing.
- Build a credit strategy. For emissions that can't be covered by SAF, evaluate CORSIA-eligible carbon credit programs (VERRA VCS, Gold Standard, etc.) and secure volume before Phase 2 demand spikes prices.
The bigger picture
CORSIA Phase 2 doesn't exist in isolation. It overlaps with the EU ETS for intra-European flights, ReFuelEU for departures from EU airports, the UK SAF Mandate, and emerging schemes in Japan (10% by 2030), Singapore (1% from 2026), and Korea. Airlines operating globally face a patchwork of carbon pricing and fuel mandates that CORSIA sits on top of.
The common denominator across all these schemes: SAF. It's the only compliance instrument that counts toward multiple obligations simultaneously. That makes SAF procurement not just an environmental decision but a regulatory risk management strategy.
For a complete view of global SAF mandates and how they interact, see our regulatory tracker covering 20 active mandates across 6 continents.