CORSIA and the Evolving Voluntary Carbon Landscape – Market Insights
A tightening balance between demand and available supply
The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is ICAO’s market-based tool to help airlines offset growth in emissions above 2019 levels, with a first compliance window running from 2024 to 2026. Under Phase 1, airlines flying between participating states must acquire CORSIA-eligible emission units (EEUs) to meet their offset requirements. Those Eligible units are sourced from the voluntary carbon market (representing verified emission reduction or removal from projects on the ground). Not all credits are available, CORSIA having tight rules on acepted registries and methodologies (read here the latest release from October 2024).
In practice, we already see a notable mismatch between demand and currently visible supply. Based on IATA’s September 2025 update, airlines are expected to need 146 to 236 million EEUs during Phase 1. On the supply side, 15.8 million units have so far been publicly issued and confirmed as CORSIA-eligible, drawn entirely from Guyana’s ART TREES program. Trades under IATA’s 2024/25 sales framework have settled near USD 21.70 / tonne.
One complicating factor is that credit eligibility under CORSIA depends on host countries issuing Letters of Authorization (LoAs) and applying corresponding adjustments to their national commitments. Progress on these legal and regulatory steps is uneven across jurisdictions.
That said, more supply may come. Several carbon project developers are actively preparing to secure CORSIA eligibility for their credits, some express confidence that they will succeed. That would help expand the eligible pool, though the timing is uncertain. Based on the current gap, most market forecasts expect a structural shortfall to persist throughout 2024–2026, likely extending into Phase 2 unless many new credits come online quickly.
Standard-setting momentum and gradual improvement in credit quality
Quality initiatives across the voluntary carbon market are accelerating, especially for engineered carbon removals and updated land-use methodologies. The Integrity Council for the Voluntary Carbon Market (ICVCM) recently approved six new engineered-removal methodologies, developed by Isometric and the Gold Standard, while also finalizing upgrades to existing approaches in biochar and forestry. In parallel, the Voluntary Carbon Markets Integrity Initiative (VCMI) has refined its Claims Code and Scope 3 Action Code, giving companies clearer guidance on how to use carbon credits without overstating their impact.
Together, these changes are steadily broadening the pool of “high-integrity” credit categories that investors and buyers can rely on. Because the new methodologies are still early in deployment, meaningful supply from them will take time to materialize. Prices for higher-rated project types, particularly afforestation and engineered removals, have continued to rise through 2025, reflecting a visible market preference for verified quality over volume.
Importantly, CORSIA’s own eligibility framework acts as a parallel quality filter, which means that airlines seeking compliance-grade credits may soon compete with corporate buyers pursuing the same, limited pool of high-integrity units.
European policy signals for carbon removals
The European Union’s carbon removal policy is gradually taking shape and could become a major influence on global carbon markets—both as a source of opportunity and as a test of credibility. The proposed Carbon Removal Certification Framework (CRCF) is now in expert-group review, with delegated acts expected to be finalized by early 2026. The framework aims to establish a unified EU system to certify removals based on transparency, additionality, and long-term storage. In parallel, the European Commission is studying how certified removals could eventually link with the EU Emissions Trading System (EU ETS) or be supported through a dedicated EU purchasing program, which would create an early, compliance-style demand signal.
If implemented effectively, this could provide the first structured policy demand for removals in Europe, giving developers and investors a clearer route to market and potentially stabilizing long-term prices. However, the process also introduces complexity: the CRCF will likely set stringent quality thresholds that many current voluntary projects may struggle to meet, and overlapping accounting between voluntary and compliance systems could create uncertainty around claims. For now, the initiative sends a strong signal that the EU intends to integrate removals into climate policy—but it also underscores that regulatory clarity, rather than sheer enthusiasm, will determine how quickly supply and demand converge.
United States: mixed policy environment
The United States policy environment remains fluid, with contrasting signals for carbon markets and removals:
- At the federal level, recent administrative reviews have slowed or reconsidered several climate-related programs, creating uncertainty around future funding streams for clean-energy and carbon-removal initiatives.
- Meanwhile, the Environmental Protection Agency (EPA) has moved to expand permitting for Class VI wells, a step that supports the build-out of carbon capture and storage (CCS) infrastructure. Some reports indicate delays or reductions in funding for Direct Air Capture (DAC) hubs, affecting the pace of project development.
These shifts are prompting developers and investors to reassess project locations and financing strategies, with growing attention to policy stability in other jurisdictions such as the European Union and Canada. For now, the U.S. voluntary carbon market continues to function but under a less predictable policy backdrop, which makes long-term planning more challenging for both buyers and project developers.
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