EU Proposal Could Invalidate CORSIA Phase 1 Credits for Airlines

The EU Commission is proposing stricter eligibility for carbon credits used under CORSIA. A draft document sees that the vast majority of credits currently tagged for Phase 1 (CP1, 2024–2026) could become ineligible for EU-based airlines.

Key Elements of the Proposed EU Restrictions

1. Exclusion of High Forest, Low Deforestation (HFLD) Credits

The draft proposes excluding credits generated from methodologies that credit the preservation of existing high-carbon forest stocks rather than new, additional reductions or removals.

Guyana’s jurisdictional REDD+ project under ART is noteworthy because it accounts for approximately 25 million of the roughly 33 million CP1-tagged credits issued to date. As an HFLD initiative focused on maintaining existing forest carbon stocks, it would no longer qualify.

2. Strict Limits on Non-Renewable Biomass (fNRB) Fraction

Credits, especially from clean cookstoves projects, where the fraction of non-renewable biomass (fNRB) exceeds the host country default value (as defined in Table 3 of CDM TOOL33 version 3.0) would also be excluded. This prevents over-crediting and aligns CORSIA offsets more closely with Article 6.4 of the Paris Agreement (the Paris Agreement Crediting Mechanism, or PACM).

Impact on Existing Supply

According to the draft, they estimate that the application of the criteria under this section 2 of the draft would make ineligible all the supply of CORSIA units currently available..

• Clean cookstove projects could potentially salvage eligibility by voluntarily cancelling a portion of their issued credits to align with a more conservative fNRB value.
• This adjustment would make only about 10% of the affected supply eligible on an ex-post basis.
  
  

Additional Safeguards Under Consideration

• Country Eligibility: Only credits from countries that are both Paris Agreement parties and active CORSIA participants would qualify (currently around 100 countries, with the list to be updated annually starting 2027).
• Corresponding Adjustments: The Commission may require that host countries notify “first transfer” via authorization or issuance (rather than “use” or “cancellation”). This would trigger corresponding adjustments immediately, ensuring the host country cannot later step back from its obligations.
• Registry Requirements: No additional registry-level rules beyond those already approved by ICAO.
  
  

Outlook for CORSIA Phase 2 (2027–2035)

The draft signals even more stringent criteria may apply in the second phase, including:

• Prioritizing units issued under the Article 6.4 Paris Agreement Crediting Mechanism (PACM)
• Accepting only credits of demonstrably equivalent integrity
• Introducing enhanced carbon reporting obligations on host countries to ensure alignment with post-2030 international accounting rules
  
  

Conclusion

Sources report that European airlines have paused procurement activity while awaiting final clarity on these rules. Buyers in Asia have similarly pulled back, citing tightened budgets and uncertainty from Europe. The proposal risks creating scarcity for Phase 1 compliance, particularly given that EU airlines must also navigate the separate EU Emissions Trading System (EU ETS). The Commission's draft is not final, and implementation timeline is uncertain, but their direction is no longer ambiguous.

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