The European Commission plans to adopt an implementing act that lays down the requirements for the use of carbon credits for compliance by EU-based aircraft operators under the first phase of the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) in the second half of this year, a commission official told Argus today.
The commission shared a concept note with its expert group on climate change policy with preliminary ideas of additional requirements to be imposed on offsets eligible for compliance for European airlines this week.
If adopted in this shape, the requirements under the implementing act would invalidate nearly all existing supply under Corsia Phase 1 (CP1) — credits from projects using high forest, low deforestation methodologies and from activities that calculate the baseline fraction of non-renewable biomass above the adopted Clean Development Mechanism values.
So far only one batch of 500,000 credits from a methane leakage reduction project in Uzbekistan would be fully eligible for CP1 under the impending rules. Project developers could also cancel a share of their credits to comply ex-post, leaving about 10pc of existing CP1 supply eligible for EU-based airlines if they choose to do so.
The commission wants to set Article 6.4 of the Paris agreement as a benchmark for credits for Corsia compliance in the EU from Phase 2 (2027-35), the official said. But for Phase 1 it will allow any of the UN-approved standards, while excluding credits of the "lowest environmental integrity", to provide more flexibility to airlines to meet their offsetting obligations, they said.
European airlines have so far remained on the sidelines of the market and delayed procurement decisions awaiting regulatory clarity from the EU. The uncertainty has also stalled participants in Asia, where some operators were looking to the EU for policy signals in recent weeks, according to a source. Market participants expect European consumers to come to the market after the implementing act is adopted, although under the proposed requirements the available supply pool would be severely restricted.
The implementing act will come after a scheduled review of the European emissions trading system (ETS), as part of which the commission will recommend whether to include emissions from departing international flights. The ETS currently applies only to intra-European Economic Area journeys.
